Six ways to help your kids get on the property ladder

As the housing market evolves, many parents are exploring ways to help their children achieve their homeownership dreams.

If you’re a parent looking to assist your child in purchasing their first home, here are some strategies to consider.

1. Gifting funds

Providing a cash gift could significantly boost your child’s home deposit while keeping you free from ongoing mortgage responsibilities.

2. Going guarantor

Agreeing to guarantee your child’s mortgage could help to reduce their required deposit. As this option may limit your own future borrowing capacity, it requires careful consideration and legal advice.

3. Using home equity

If you own your home, you could borrow against your home equity to contribute to your child’s deposit. Alternatively, you could use your equity to provide a guarantee for their mortgage. Each approach carries risks, so expert mortgage and legal advice is essential.

4. Lending interest free

You can choose to lend money to your child interest-free, secured through the support of a lawyer with a deed acknowledging the debt. The principle being your child repays the funds at a chosen time such as if the house is sold, thereby protecting your finances.

5. Offsetting part of the mortgage

Using your savings to offset your child’s mortgage can reduce their interest payment and support them to repay the loan faster.

6. Joining in ownership

Co-owning a property with your child means contributing to the deposit and sharing mortgage responsibilities. Keep in mind that this arrangement may be seen as an investment by lenders, affecting the required deposit and interest rates.

Do your research

While it can be rewarding to support your child’s property journey, it’s also a significant investment that requires careful planning, consideration and legal advice.

Each strategy has its advantages and risks depending on your individual circumstances.

If you’re looking for ways to support your child in purchasing property, start by reaching out to your Mike Pero Mortgage Adviser today to discuss your options.