With house prices rocketing, tougher affordability checks and the ever-increasing amount of money first-time buyers need to save for a deposit, is it any wonder that so many struggle to get onto the property ladder?
As a grandparent or parent you may naturally want to give your loved ones a lift up but may not have the cash assets available to do so. The good news is that there are options available that can allow you to provide a boost without the need for a large cash injection. Here, independent mortgage experts John Charcol, look at what these solutions are:
If you do have some savings for a pension, but perhaps don’t want to give it all to your child or grandchild to fund their deposit one option that you can use is a Springboard Mortgage. The lender will offer your family member the ability to buy their home without a borrower deposit if you can provide 10 per cent of the property’s price as security. At the end of a fixed term, if your child or grandchild has kept up with the repayments, you’ll get your money back with interest.
With guarantor mortgages, the amount your loved one can borrow is based on your income and assets, as well as theirs. You’d be guaranteeing to meet any repayments that they failed to pay, which can be risky, especially if you still have a mortgage on your own home.
A joint mortgage considers both you and your child or grandchild’s income, as well as any money outstanding on your own mortgage. You’ll both be named on the mortgage agreement and on the deeds, providing you with some power over any future transactions. But you will also be liable for keeping up the mortgage repayments.
If you own your property or have an existing mortgage, one option that is available to free up cash is by remortgaging. This would involve arranging a new mortgage with your existing provider or transferring to another lender. A further advance from your existing lender is also another option to secure money against the value of your home. Before releasing any equity it’s important to consider the impact that increased borrowing would have on your own standard of living and your retirement plans.
Joint Borrower Sole Proprietor
A limited number of mortgage lenders are offering sole proprietor and joint application mortgages, enabling individuals to help their loved ones onto the property ladder. Some banks have said that if an individual is named on mortgage, but not on the title deeds at Land Registry they will not have to pay the additional stamp duty or capital gains tax that can be liable from second property ownership.
- To find out about unlocking cash from your home using equity release, speak to one of our experts today by calling FREE on 0808 156 9010, or download your copy of our FREE Guide.
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