Is Borrowing From Parents The Best Mortgage Route For First Time Buyers?

The Bank of Mum and Dad is projected to be a top 10 lender for first time buyers in 2020, however the good news is that some options currently available on the market might cost parents no cash at all.

Lenders are appreciative that the rise in the average parental contribution in 2019 of £21,600 is beyond the reach of many parents therefore alternative products are coming to market to help first time buyers get onto the housing ladder without this level of outlay required.

Financing Your First Home’s Mortgage

With the increasing cost of buying a first home many parents are looking at ways to help this become a reality through providing a part of the deposit, and relying on the child’s income to be sufficient to justify the mortgage. Gifting the deposit has hit the headlines both because of the increasing level of deposit needed as well as circumstances where the gift although pledged at the beginning creates difficulties if couples split or if the parent suddenly is in financial trouble and looking for the gift to be returned.
Parents without the available funds to raise the gifted deposit have until recently been unable to help however recent products brought to market have sought to assist in these circumstances.

Alternatives To Parental Mortgage Deposits

An independent Mortgage Adviser, such as Cullen Financial Services Ltd , with extensive knowledge can quickly review the market with you, and identify a route to home ownership that best suits everyone involved. The increased number of lenders and revised options means that the previous one size fits all has shifted to a more nuance approach for parents and children to consider
Examples of movement seen include;

• Becoming a guarantor for the mortgage
• Parent and child opt for a sole proprietor sole occupier mortgage
• Part rent part buy
• Release equity in the parents home to fund the deposit

Call Cullen Financial Services Ltd for an initial conversation, free of charge of the options available, we will review your personal circumstances and objectives to understand how to best advise you on financing your first mortgage. We will make a recommendation and if accepted will deal with all of the paperwork for you.