When I purchased my first property it was a two-bedroom flat and I think it cost me £30k.  This was back in 1997.

Things are far different now with increased house prices far outstripping wage increases, meaning our poor kids will not have it as easy as we did a generation, or few, ago! Especially in the areas our offices in Greenwich, Brockley, Charlton, Eltham and in fact most of South East London and beyond.

Further issues are if us parents, or grandparents, want to buy with our kids then there is the extra 3% stamp duty levy to consider or missing out on the Stamp Duty exemption… or is there a solution? Of course, there is – when you deal with mortgage experts so read on.

Many lenders are designing intuitive products to ensure that we can help our young folk and being involved with their mortgage (to ensure affordability generally) whilst not actually being on the title deeds – meaning no extra stamp duty needed.  Here are a few solutions you may want to talk to us or your preferred Independent Mortgage Expert;

• Joint Borrower, Sole proprietor mortgages – This is whereby one, or both parents, are on the mortgage but only the child’s name will be on the title deeds of the property.  There are a few lenders offering this type of mortgage, but the parents normally need to be aged 70 at the end of the mortgage term – hopefully, with our older parents now working past this age the lenders might adjust accordingly so watch this space!
• Springboard mortgages – This is where a lender will allow a first-time buyer to buy without putting down a deposit. The way this works is where someone, normally a parent, puts a 10% deposit into a saving account with the mortgage lender. After 3 years (normally) the parent will get their money back, along with interest accrued! If the child has a 5% deposit in addition, then interest rates can be slightly lower.
• Guarantor mortgage – this is the traditional way our kids could take advantage of getting on the property ladder. Unfortunately, there are not many of these mortgages now on offer, but we have access to a few who will accept guarantors still
• Lenders not on the high street – Some building societies or challenger lenders look to offer unique lending into the marketplace where banks cannot, generally! For example, what if there was a lender who could allow up to 12 family members to join forces to help a young family member. They can get 20% of the property purchase price into a savings account via a mixture of savings or a charge on their home – there is a lender who will do this!
• Gifting a deposit – if you lend your child monies for the deposit and it is deemed a loan then the lender is likely to treat it as such and reduce the amount, they will lend your child. If you gift the cash, then they don’t!  Furthermore, if you live for a further seven years then there won’t be inheritance tax on this gift in you are misfortunate enough to die… sorry to bring a negative into this blog!
• Lifetime ISA – If you are a first-time buyer and you are going to purchase at some point in the future then consider this as for every £4 you squirrel away the government will top-up by £1. Just be aware of exit penalties if you don’t buy as they are 25%.

I hope this has proved a good investment of your time and please do not hesitate to contact us if you want any tip-top mortgage advice… we know our mortgage I guarantee you!

Regards

Simon Hughes
MD