Helping Offspring Onto The Property Ladder
As a father of two, finding ways to help offspring with a house purchase is something held dear here at Premier Financial Group.
There are two main ways to help an offspring get a mortgage;
- Provide all or part of a deposit for your offspring by way of a gift.
- Use your income to 'guarantee' extra borrowing for your offspring.
Both have considerations of their own. The first option is to gift or lend money to an offspring for a deposit on a house which is often with a partner. This can put your savings at risk if they split up or you wanted it back for whatever reason. The second option was not so common but was made unfavorable last year when the government introduced an extra 3% stamp duty if a home was not your main residence. The reason being if you helped an offspring by using your income since last year, you would have to be registered on the deeds and pay the additional stamp duty.
Bank of Ireland has released a new product called First Start allowing a close relative to be considered in the income calculations but does not need to be on the mortgage deeds. This in its own right saves the 3% additional stamp duty on the total purchase price. I should mention, there are instances where it may still be favorable to be on the deeds and pay the extra tax such as Inheritance tax planning considerations; but the good news is you have a choice.
Borrowing power is boosted by combining the offspring’s income with that of a close relative. It’s not just for First Time Buyers, It's also available to buyers who have been out of the property market for a while, or who need to buy a property on their own. For example if their personal circumstances have changed. Together, they can borrow up to 95% of the value of the property meaning that in most cases the offspring should be able to provide a deposit without the need of a gift from close relatives. It is available for purchases only on a repayment basis (not interest only) and up to £500,000 can be borrowed.
Bank of Ireland will insist you use a mortgage broker to apply for this scheme and not all mortgage brokers are authorised to recommend Bank of Ireland. As Independent advisers, Premier Financial Group are authorised to recommend this scheme and you can download a brochure or view a video about the scheme from our website at www.premierfinancialgroup.co.uk. You may also speak to a qualified adviser by calling 01603 750000 or use the contact us form on our website.
Ian GoodyChief Executive Officer
Click here to view the video by Bank of Ireland