First-time home buyers First-time buyer help from parents
Want to help your child get onto the property ladder by contributing to their deposit or acting as a guarantor for their mortgage? We explain your options.
High house prices, tough affordability checks and the need to save a large deposit can make it hard for first-time buyers to get a mortgage and buy their first flat or house.
If you want to help your child buy a home but don't have enough savings to simply give or lend them the cash, there are several options you can consider.
- Before deciding how to proceed it’s worth speaking to a whole-of-market mortgage adviser. Which? Mortgage Advisers is an impartial mortgage broker that can offer guidance on the best financial products for your personal circumstances. For a free consultation, call 0808 252 7987.
Mortgage options for parents who want to help first-time buyers
With guarantor mortgages, the amount your child can borrow is based on your income and assets, as well as theirs.
You’d be guaranteeing to meet any repayments that your child failed to pay, which could be risky, especially if you still have a mortgage on your own home.
- Find out more with our guide to guarantor mortgages, which also explains alternatives, including family offset mortgages, family deposit mortgages, and flexible family mortgages
A joint mortgage considers both your and your child’s income, as well as any money outstanding on your own mortgage.
Both you and your child will be named on the mortgage agreement and on the deeds, providing you with some power over any future transactions. But you would also be liable for keeping up the mortgage repayments.
- If you already own your own home and take out a joint mortgage with your child on another property, you'll need to pay a 3% stamp duty surcharge. You can find out more about this in our guide to buy-to-let and second home stamp duty.
If you have a mortgage on your own property, one option is to free up some cash by remortgaging. This would involve arranging a new mortgage with your existing provider or transferring to another lender.
Your mortgage term could be increased to absorb the additional borrowing, your repayments could rise, or both.
A further advance from your existing lender is another form of loan you could get that would be secured on your home.
Before remortgaging it’s important to consider the impact that increased borrowing would have on your own standard of living and your retirement plans.
- You can learn more by checking out the Which? Mortgage Advisers remortgaging guides
10 tips for parents helping first-time buyers
If you decide to help your child buy a home, it’s likely you'll want to maintain an element of control, if only to ensure your money isn’t wasted.
Here are 10 tips for parents who want to help their child buy their first property without causing any conflict or severe financial difficulties.
1Do your research
If you can't afford to buy a house or flat outright, it's likely you'll want to help your child find the best possible mortgage deal.
Which? Mortgage Advisers looks at every mortgage from every available lender and will give your child impartial advice on the best type of mortgage for their individual circumstances. They can call the team on 0808 252 7987 for free.
2Consider buying the property jointly
If you do buy a an official share in the property, don’t forget to update your will to reflect what you’d like to happen to it upon your death. Our will-writing guide explains how to validate, store and update your will.
3Understand your tax liabilities
If you are named on the deeds, you may still be liable for certain taxes associated with the property. Visit our guides to tax on property and inheritance tax for information on your potential tax liabilities.
4Be clear about how things will work
You need to make your child aware whether you are making a gift, a loan (with or without interest) or an investment. It might be an awkward conversation, but it will make things much easier in the long run.
If your child feels embarrassed or guilty about accepting money from you, this could make them less likely to tell you if they’re worried about meeting their monthly repayments. Encourage an open dialogue and tell them that they can always come to you if they get into difficulties.
6Make it legal
Get a legally binding agreement drawn up by a solicitor. To safeguard a loan or investment, make sure it stipulates the nature of any arrangement.
7Formalise things with the Land Registry
Even with a legal agreement in place, your child could potentially sell the property without your consent. If you're concerned about this and want to avoid it happening, complete Land Registry form RX1.
8Discuss home improvements
If you’re buying jointly, make sure you talk about the home improvements you think the property could benefit from - your ideas might be very different from your child’s, so it’s worth having this conversation early on.
If your name isn’t on the deeds, respect your child’s decision to alter their home as they wish.
Since the recession, lenders have become much stricter about mortgage lending, but it’s still essential to be honest about your financial circumstances. Don’t exaggerate your income to secure a larger mortgage.
10Consider future rate rises
Don’t put yourself in a financially risky predicament by overextending yourself, and don’t assume that mortgage interest rates will remain at the same level.
The Bank of England base rate is expected to rise soon, and that will mean mortgage-rate increases. To find out how your monthly repayments will be affected by a rise, use the mortgage calculator on our buying a house hub.
- House-viewing checklist - download our checklist and take it on viewings with your child
- Buying a house: step-by-step guide - share this with your child so they understand the process
- Which? Conveyancing - get discounted conveyancing from our preferred legal partner
Your home may be repossessed if you do not keep up repayments on your mortgage.
Which? Limited (registered in England and Wales number 00677665) is an Introducer Appointed Representative of Which? Financial Services Limited (registered in England and Wales number 07239342). Which? Financial Services Limited is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited. Registered office: 2 Marylebone Road, London NW1 4DF.