Top Strategies for Parents to Support Their Children in Getting a Mortgage

1. Gift or Loan for a Deposit

One of the most common ways parents help is by gifting or lending money for the deposit. A larger deposit improves mortgage options and often leads to better rates. Make sure to specify whether the contribution is a gift or loan, as lenders will need to know, and it may affect your child's mortgage eligibility.

2. Become a Guarantor

Parents can act as guarantors on their child's mortgage, which means using their own income or assets to back the loan. This option is ideal for parents who want to help but prefer not to gift cash upfront. It increases the chances of approval, especially if the child’s income is lower or their credit history is limited.

3. Joint Borrower, Sole Proprietor Mortgage

This type of mortgage allows parents to co-sign the mortgage with their child, but only the child’s name will be on the property deed. The parents' income is considered when applying, increasing the borrowing amount without affecting future inheritance tax planning.

4. Offer Financial Guidance

Helping your child budget and plan for homeownership is invaluable. Offer advice on how to improve their credit score, manage debt, and build up savings. This can ensure they’re in the best financial position to apply for a mortgage.

5. Help with Mortgage Research

Parents can assist in researching different mortgage products, including fixed-rate, variable-rate, or help-to-buy schemes. You can also help your child work with a mortgage broker, who can guide them to the best deals based on their unique situation.

6. Provide Knowledge on Additional Costs

Buying a home comes with various additional costs beyond the deposit, such as stamp duty, legal fees, and home insurance. Educate your child on these expenses and help them create a financial plan that includes these costs.

7. Help Navigate Government Schemes

Research government schemes like Help to Buy, Shared Ownership, or Lifetime ISAs, which could offer financial advantages to first-time buyers. Explaining these options can help your child make an informed decision on the best way to structure their mortgage.

Conclusion:

By offering financial help, co-signing, or simply providing guidance, parents can significantly improve their children’s chances of getting a mortgage and securing a home.