For many first-time buyers, saving enough for a deposit can be one of the biggest challenges when buying a home. As a result, more parents and grandparents may be looking for ways to help younger family members take their first steps onto the property ladder.
Providing a cash gift towards a deposit is one option, but it isn’t necessarily the only way to help. Depending on your circumstances, there may be different mortgage arrangements available that could support a first-time buyer without requiring a large cash gift upfront.
Helping with a first-time buyer deposit
A larger deposit can play an important part when buying a first home, but finding the money needed can take time.
For some families, contributing towards a deposit may be possible. For others, providing a substantial lump sum may not be practical or may not fit with their own longer-term financial plans.
That is why it can help to understand the mortgage options available before deciding how best to support them.
Gifting money isn’t the only option
While a gifted deposit may be suitable for some families, there may be other mortgage arrangements that could help parents or grandparents support a first-time buyer.
Every lender approaches these arrangements differently, and the options available will depend on the buyer’s circumstances as well as the financial position and objectives of the family members providing support.
Taking advice can help you understand which options may be available and how different approaches could work in practice.
Consider your own financial circumstances
Helping a child or grandchild buy their first home is a significant financial decision, so it is important to consider how any commitment could affect your own finances.
Providing financial assistance could have an impact on areas such as your savings, retirement plans or ability to borrow in the future.
Before committing to any arrangement, it is therefore important to understand both the immediate and longer-term implications for everyone involved.
Family support and first-time buyers
With house prices and affordability continuing to be important considerations for aspiring homeowners, family support can play a valuable role in helping some first-time buyers get onto the property ladder sooner.
However, there is no single solution that will be right for every family. The most appropriate approach will depend on individual circumstances, finances and longer-term plans.
Thinking about helping your child buy a home?
If you’re considering helping a child or grandchild buy their first home, getting advice before making any financial commitments can help you understand the mortgage options available and any potential implications.
If you’d like to discuss the options available to you and your family, speak to one of our advisors.
To find out more about mortgages, personal insurance, business insurance and protection or to discuss the options available for your circumstances, contact our team of advisors
