With ever-increasing residential property prices, we are speaking with more clients who are keen to help their children onto the property ladder. In this article we review a recent mortgage case, where Matt Bryant, Mortgage Adviser at Chase de Vere, secured a guarantor mortgage for one of our clients.
Matt’s client is in his mid-50s and is a partner in a firm. He has significant financial assets through property, land and commercial dealings, and he wanted to find a way to support his children, who are both in their mid-20s, in buying a property for them to live in.
However, he also wants to ensure that his children understand the value of money, so he isn’t just giving them money to buy a property. Instead, he approached us for a guarantor mortgage. His two children are both young professionals, but they couldn’t afford a suitable property on their own due to their incomes, though will be in a position to fully takeover a mortgage as their careers progress.
They were looking to buy a property in London which is worth £675,000. They wanted to secure a mortgage of £475,000. Without the client acting as a guarantor, the children would only have been able to borrow a maximum of £325,000 based on their income.
Matt was able to place the mortgage with Generation Home, who are a new lender specifically geared up for these types of mortgages and they were able to lend the £475,000 needed to buy the property, thanks to using the client’s income to support the borrowing. While the client is named on the mortgage, he is not included on the deed, removing any stamp duty liability for him.
This would have been a very difficult solution for the clients to find on their own. The challenge to placing this case was the client’s age, as many mortgage lenders will only allow guarantors to take a mortgage term up to when they retire. However, Generation Home has a more lenient policy and can lend past retirement age, which means they could give a longer mortgage term, making the mortgage payments more affordable for the children.
From an affordability aspect, they did also look at a shorter mortgage term. However, the client didn’t want to contribute towards the mortgage payments and so he wanted to ensure that the children could afford and maintain them with their own incomes.
The client and his children were delighted with the outcome, as they were able to find a resolution that works for all of the family.
These types of mortgages are becoming more common, as many parents want to help their children to get onto the housing ladder, and our Mortgage Advice team is perfectly equipped to help our clients with these and all other mortgage cases.
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This information is a guide only and should not be relied on as a recommendation or advice that any particular mortgage is suitable for you. All mortgages are subject to the applicant(s) meeting the eligibility criteria of lenders. Make an appointment to receive mortgage advice suitable for your needs and circumstances. Guarantors should obtain independent legal advice before they agree to become a guarantor. Think carefully before securing other debts against your home. Mortgages are secured on your home. You could lose your home if you do not keep up payments on your mortgage.
Content correct at the time of writing and is intended for general information only and should not be construed as advice.