As the average age of first-time buyers hits 33, high property prices mean that help is still needed from the ‘bank of mum and dad’, reports Which? For parents, the good news is there are ample ways to help, from gifted deposits to joint and guarantor mortgages.

London independent mortgage advisors explain the challenges, and advice on how you can help your child in 2020.

A recent report uncovered how much harder it is for first-time buyers today than it was 50 years ago. First-time buyers need to borrow 18 times more than those in the 1970s, as the price of a first home has increased from 4 times the average salary to 8 times.

This has resulted in the average age of first-time buyers increasing from 25 to 33 over the past 50 years. The market has meant that buyers are having to rely on assistance from their parents and grandparents.

The most common way that parents can help is by gifting them some or all of the deposit required. Research by Habito found that 40 per cent of first-time buyers are now gifted cash by a family member, with this figure rising to 60 per cent in London.

It may seem like a simple way of offering assistance, but there are tax implications to consider. Any cash gift of over £3,000 in a single year could be subject to inheritance tax (IHT) if you die within 7 years of making the gift.

Some lenders may require a signed declaration stating that you have no legal interest in your child’s property, and a letter confirming you provided the cash and that it doesn’t need to be paid back

Another alternative is to use your property or savings to help your child with a guarantor mortgage. Guarantor mortgages are sometimes described as 100% mortgages, as many don’t require the borrower to put down a deposit.

Instead, the parents will either have their property used as collateral on your child’s mortgage, if they default, or your savings locked into a savings account with the lender. However, the interest rates on the savings will be low.

A joint mortgage would allow you to purchase a property with your child. This could increase the chances of your child getting a mortgage, but it can be expensive and does have a higher risk.

The biggest concerns are that your name will be on the deeds of your child’s home, so you’ll need to pay the stamp duty surcharge if you already own a property, and you’ll also be jointly liable for the mortgage repayments.

Joint borrower sole proprietor (JBSP) mortgages offer an innovative way of buying a property with your child but without needing to paying the stamp duty surcharge. JBSP deals will take both your child’s and your own finances into consideration when assessing the affordability of the mortgage, but the property deeds will only be in your child’s name.

You will not officially own any share of the property, but you will be named on the mortgage and be held equally responsible for keeping up with the repayments.

If you’re wanting to know more about the above options, get in touch today for independent mortgage advice in London.

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Hannah D
Hannah D
07:42 09 Sep 19
I would fully recommend Greg and Greenacre Financial Services. As a first time buyer I was daunted by the process of... finding the right mortgage for me however Greg made the process really simple, clear and quick. He was always available to answer any questions and happy to explain everything. I wouldn’t hesitate in recommending Greenacre FS to my friends and more
Jessica Cohen
Jessica Cohen
19:33 26 Aug 19
We first met with Greg in May for advice as we had adverse credit and irregular pay and didn't think a mortgage was in... our reach. Less than two weeks later Greg had fully arranged a great deal for us on our first mortgage. He was available whenever we needed him, 7 days a week and in the evenings. We cannot thank Greg enough for helping us buy our first home!read more
Seren Fletcher
Seren Fletcher
08:56 24 Aug 19
Would highly recommend Greg and Greenacre Financial Services. Was extremely professional and helpful. Our mortgage... wasn’t straight forward due to my husband being self employed but Greg was very knowledgable and managed to find us a really good mortgage. Looking forward to working with him again in the futureread more
13:24 23 Aug 19
Graham at Greenacre was excellent in helping me get a mortgage for my house purchase. He was always available when... needed, provided an efficient service and was very knowledgeable. Highly recommended!read more
Ian Hatter
Ian Hatter
11:07 16 Aug 19
What can I say, Greg has been absolutely amazing in sorting out a mortgage for me I never thought was possible. It has... meant I have been able to buy a house, a few months ago, I would never have dreamed of being able to buy after talking to high street lenders. He worked exceptionally hard and always kept me updated with every step of the process. Buying a house is extremely stressful, but Greg took all that stress away from me. I cannot recommend Greg enough to anyone looking to buy a property. Thank you so much for your help Greg, it's greatly more
Sean Kelly
Sean Kelly
15:27 30 Jul 19
10/10 EXCEPTIONAL service and result. Highly recommend. Greg and the Greenacre Financial Services team were fast,... knowledgeable, and honest. All the qualities you want and need. Very pleased I was recommended to Greenacre. Customer for life!read more
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