Once upon a time, in a land not so far away, there was a thing known as “empty nest syndrome”.
This was when middle-aged parents waved off the last of their chicks as they came of age and left to make their way in the world.
One minute they were there, cluttering up the family home with all their stuff and their friends and their strange gloopy bathroom products.
The next they were gone and the parents didn’t know what to do with themselves.
Today, however, for a whole variety of economic reasons, young adults are staying put longer. Many are keen to get their own place but they’re just not in the financial position to do so.
So what can mamas and papas do to help their kids get that all-important first foot on the property ladder? Let’s find out.
For many people trying to buy their first home, the monthly outlay for the mortgage is not the issue. In fact, with the current low interest rates there are some great mortgage deals up for grabs.
No, the issue tends to be the deposit. Having to find five or ten per cent of the property’s price upfront is the biggest challenge, particularly for those at the start of their careers.
By gifting or lending this amount, parents can help their children move into their own house sooner and pay money every month towards a mortgage as opposed to a landlord.
Many people choose to downsize after their kids have left home and planning for this could help free up some funds to help with the deposit – as well as a much-needed round-the-world cruise, of course.
With a guarantor mortgage parents do exactly what it says on the tin – guarantee that the mortgage will be paid each month.
So, if a mortgage repayment is missed, the guarantor will have to cover them, thus keeping the lender happy and putting junior temporarily on the naughty step (you’re never too old for the naughty step!).
Here, both the parent and the child will be named on the mortgage and deeds.
This means that the loan will be based on the income and assets of both – meaning a larger sum can be loaned.
Do take note if you have one of those rollercoaster relationships with your darling young ones: if one party stops paying, the other will be liable for the debt.
Family offset mortgage
As a direct result of the difficulties of first time buyers, there has been a huge rise in the number and types of different mortgages available.
Parents – or grandparents – can now place savings in an account linked to the mortgage in the buyer’s name. This sum is then deducted from the mortgage total, making monthly repayments lower.
Whatever method you choose to help your fledglings, the next step is going to be the fun part – helping them choose a nest of their own from all the hot properties on s1homes!