Parents Lending Money to Kids
Many banks and building societies will now let parents contribute to a deposit up to 20% of the purchase price – either by way of cash, using their home as security or an income booster. This means you can access a lower interest rate if you have a bigger deposit.
Some of the mortgages available offer parents a savings account that pays interest and the cash deposited acts as your deposit. This cash can be withdrawn usually after a set number or years or when the property has increased in value to make the deposit 20% of that value. It’s also possible for the parents’ home to offer equity by agreeing to a legal charge on their home, meaning it can’t be sold without paying back the loan.
Income Boosters
Other options include income boosters where they either pay part of the loan or guarantee to cover it if it’s not paid. Parents can also offer help to second and third steppers up the property ladder which is becoming more common as property prices continue to rise, albeit at a slower rate, and interest rates are uncertain. Our expert advisers can guide you through the options by starting with a 30-minute consultation.
