A building society has published a series of guides to help families involved in a ‘Bank of Mum and Dad’ house purchase avoid any potential pitfalls.
Family Building Society has created the online booklets after it uncovered evidence that, while most parents or grandparents were happy to help financially, they would rarely discuss the terms of the support and the longer term implications.
But, it warned, there were potential financial and legal repercussions and it was important these were addressed before proceeding.
Problems which can arise
Concerns are often expressed in Bank of Mum and Dad transactions over whether a child’s partner can acquire an interest in the home if they make little or no financial contribution, for example.
There are also questions over the impact of inheritance tax and stamp duty where parents or grandparents become joint owners.
Family Building Society’s guide also addresses the effects of family members becoming a guarantor on a mortgage, and how having a financial and legal involvement in a child’s home could be reflected in a will.
Preparing to help
Keith Barber, business development director at Family Building Society said: “Our recent research has highlighted there is a minefield of unexpected consequences when helping children onto the property ladder.
“These new guides are an answer to this ever increasing problem and can really help parents understand the implications of any financial support they give.
“We have now produced no fewer than four guides on the subject of the Bank of Mum and Dad, which can really help families through every step on lending to their loved ones.
“With proper preparation and planning, families can ensure they protect their assets and have that added peace of mind should the worst happen.”
You can read the ‘Bank of Mum and Dad – A Financial Guide’ and the ‘Bank of Mum and Dad – A Legal Guide’ by clicking here.
