Rising house prices and interest rates mean more first-time buyers are looking for help from family to get on the property ladder. Mortgage expert, Jeni Browne, explains the options to one of our readers who is keen to tap into the Bank of Mum and Dad
The Question
I am 35 and still living at home. I left home and then returned in order to save for my deposit as rental costs stinging me for the majority of my salary.
It’s becoming really disheartening for me to see house prices rising so fast and the higher they go the less valuable my ‘pittance’ of a deposit feels.
So far, I have managed to save £24,000 by putting my previous rent (£1,000) away each month for two years. But in London, where I want to buy, I can’t afford much with this amount up front.
My parents have taken pity and offered to help me out. They are planning to release some equity from their home and use it to help me with a deposit. However, with prices being so high we also think they may need to help me with repayments.
Is there any way they can help me improve my affordability where I also own the property independently?
Jeni’s Answer
I really feel for you – it can feel so hopeless. The good news is there are lenders who will allow your parents to stand as guarantors for your mortgage, and thus their income is assessed when looking at affordability.
One option available to you is something called ‘joint borrower, sole proprietor’ which means that your parents can help out with affordability by joining you on the mortgage, but just you will own the property.
I would also, as an aside, encourage you to look at shared ownership, as this may make help to make things more affordable.
Jeni Browne is business development director at Mortgages for Business
You can read more of Jeni’s advice on readers’ residential mortgage questions here. If you are interested in a buy-to-let mortgage, Jeni also writes a Q&A column on this area of the mortgage market, here.
If you have a question you would like to ask Jeni email kate.saines@emap.com
What about help to buy? Although it ends soon it is still in operation.
Yes, Help to Buy is still in operation for first-time buyers although it is due to close soon. You can find out more here: https://www.gov.uk/help-to-buy-equity-loan