With the average 10% deposit costing first-time buyers £23,000 - or £50,000 in London (based on Land Registry data), it's no wonder family members are trying to help buyers make their first house purchase.
But it's not just first-time buyers that may need help. The average cost of a house is now far higher than a flat, making it increasingly difficult for homeowners to make the second step in their housing journey.
Whether you're looking to help your child make their next move or first, we've outlined the key ways you can offer financial support and the important considerations to weigh up before doing so.
1. Offer to boost their deposit
The obvious option if you would like to help a family member get onto the property ladder, or move up it, is to offer them money towards a deposit.
What to consider:2. Keep your money with a guarantor mortgage
Family members can use their own wealth to help others get onto the property ladder, without gifting it to them directly. For example, a uses your savings or a property as security for the loan.Barclays asks that the family member providing the deposit get independent legal advice to ensure they fully understand the implications of putting money into the Helpful Start account. If any mortgage payments are missed, then the lender will hold onto your money for a longer period of time.
What to consider:Find out more:3. Boost borrowing power with a JBSP mortgage
Joint Borrower Sole Proprietor (JBSP) mortgages are another option for parents wanting to help their children get onto the property ladder. By combining incomes, a buyer can potentially qualify for a larger loan.
A JBSP will still require a deposit. As a result, guarantor mortgages are better suited if a buyer is struggling to save for a deposit, while a JBSP product is helpful if the buyer needs help accessing a larger mortgage.
Ultimately, this type of mortgage is aimed at helping borrowers purchase a property, with the expectation that they will shift to a standard residential mortgage once sufficient equity is built up over time.
What to consider: Some lenders will only accept an application where the family member is working, as income typical falls in retirement.Find out more:source https://www.which.co.uk/news/article/three-ways-to-help-your-family-buy-a-home-aXgGC3d0HPIn