With the Bank of Mum and Dad (or Bank of Granny and Grandad in some cases) becoming a frequent source of finance for many kids or grandkids looking to buy a property, more and more people are looking for ways to help support their family in looking for a home.

Back in the good old days, it’d be as simple as handing the money over to the loved one and letting them get on with. However, it’s not always financially feasible to just hand over tens of thousands of pounds to a loved one. The good news is, many lenders have recognised a lucrative niche market in your good intentions and now offer several offers that only sees you give a portion (or none, provided the loved one is trustworthy) of your money to the mortgage provider.

Guarantor mortgages
If you already have the money, and were planning on gifting it anyway, then this is the perfect offer. Your good financial standing allows you to guarantee the mortgage debt, meaning that any missed mortgage repayments on the part of the homeowner, will be picked up by yourself.

Family offset mortgages
A Family Offset Mortgage requires you to deposit the cash into a savings account, which is linked to the relative’s mortgage. Each month, both you and the relative will pay the cost of the mortgage together.

Family deposit mortgage
The Family Deposit Mortgage is a mixture of the two above mortgages. You act as a guarantor for your loved one by depositing a percentage of the mortgage into an account, where it is held as security, in case your relatives can’t afford to cover the payments. In some cases you’ll receive the money back with interest after a few years.

Flexible family mortgages
This one will depend on the trustworthiness of the family member. If you have a large amount of equity on your home, or if you own it outright, then you can now use the value of your home as a security. Another version allows you to put money in an offset account, which will lower the amount of the mortgage on which interest is charged. This one is risky and will require gathering advice from many different channels.

Joint ownership
You and the child would essentially share the ownership of the property. The size of the mortgage loan is based on both of your earnings and assets. You’ll both be obligated to repay the mortgage and if one of you fails to repay, it falls on the other to pick up the slack.
There are many methods for helping a loved one afford a property. If you need any further advice on which would suit you best, get in touch with us today.