Help Your Child Get on the Property Ladder
Posted on 6th May 2025 at 10:11
Affordable Start
To say it is only ‘young people’ who are looking for an affordable start on to the property ladder would wholly misrepresent the scale of the situation for first time buyers at the moment. With the average age of a first-time buyer (FTB) being reported as 34 years of age, dare we say their youth is a distance behind them and the days of asking the ‘bank of mum and dad’ should be long gone. But for many people, it is parents who offer the only solution to buying their first home, and the relationship of parent and child becomes one of dependence for FTBs to own a home.
Gifted Deposit
Times have certainly changed when it comes to average house prices and parents are often astonished at the deposit that is needed for their ‘children’ to even entertain buying a house. Gifted deposits are a viable way of parents helping overcome the first, and main, barrier: a 5% or upwards deposit. The monetary gift can be for a portion of the deposit and can be added to money already saved by the child, or it can be the entire deposit amount required. Lenders often require the person gifting to sign to say the money is ‘a gift’ and not ‘a loan’. This helps account for the large sum of money that is likely to have been recently deposited in their bank account and ensures it does not need to be repaid and, therefore, does not reduce affordability calculations.
Family-backed Mortgage
Like that of a joint borrower, sole proprietor mortgage the new-to-market Family-backed Mortgage helps first-time buyers to purchase a property with assistance from a friend or family member and get on the property ladder sooner. Eligible customers are now able to apply for a joint mortgage with friends or family members, while still purchasing the property in their own name. Although there is one owner, the liability for the mortgage is with both parties on the joint mortgage. With a minimum income of £20k for the owner, the FTB can apply with one or more additional applicants to maximise affordability.
Joint Borrowers, Sole Proprietor
Becoming a more common lenders’ offer, a Joint Borrower, Sole Proprietor mortgage allows up to four people, including parents, to support the mortgage without co-owning the property. Only one person owns the property (hence ‘sole proprietor’) but the mortgage combines all applicants' incomes to make it easier to qualify. However, this can limit the allowed term of the mortgage which can increase the repayments, but contacting HomeLife will help to understand more about the key factors.
Future Savings
For those with time on their side, planning early for their children’s house buying goals gives the advantage of gifting money into savings accounts at the highest interest rates or taking advantage of products with government uplifts, like that of the Lifetime ISA. Having early conversations and aligning your savings plans, as parent and child, may then eliminate the need for some of the more involved aforementioned options.
Plan together for your children owning their first home.
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