Can I buy a house for my child in the UK?
Of course. If you feel it’s time for them to fly the nest and you have the financial means to do so, you can help your child buy a house. Many choose to do this because they want to see their child make a decent living for themselves, but are fully aware that getting a mortgage isn’t easy for first-time buyers. And if they’re not buying it outright, it’s common to see parents help with the deposit instead.How can I help my child get on the property ladder?
Now that you know it’s possible, you might be wondering what is the best way to help your child buy a house. Here’s some of your options.- Gifted deposit - this is when a homebuyer receives money from a family member to use as a down payment on a property. The gifted amount could be used for the whole deposit, or just a part of it. Your child will need to let their solicitor and mortgage lender know that their deposit has been gifted with a ‘gifted deposit’ letter, and you’ll need to provide proof of documents to comply with anti-money laundering regulations.
- Loan them the money - if you’re not comfortable with gifting their deposit, then you might consider a loan agreement instead. This is fairly simple to set up, and should include any interest being charged and the payment period. The loan will also need to be declared to the mortgage lender, which may have an impact on your child’s affordability checks.
- Family offset mortgage - a family offset mortgage uses your savings to offset the balance owed on your child’s mortgage, reducing the interest and making their monthly payments more affordable.
- Be a guarantor on their mortgage - if for any reason your child is unable to make the mortgage repayments, the responsibility then lies with you as their guarantor.
- A joint mortgage - this makes you and your child equally responsible for repaying the mortgage. Your combined incomes also give you access to more mortgage rates that are available on the market.
