How best can we help my stepson buy his first home?
Posted on 27 March 2013 by Merlin
My stepson, who is aged 30, and has a secure job with a big consulting firm at a salary of £44,000, is renting at the moment but wants to buy. His girlfriend, with whom he has been for more than 5 years, will probably not own the property, but will contribute as a kind of rent, probably around £400 a month. He has a deposit of around £10,000 available, and we can help with the deposit too, and possibly with mortgage repayments. He is looking to buy in the TW12/Hampton/Hampton Hill area at around £250-300k. How large a mortgage could he get, and how would we our contribution (deposit and mortgage repayments) affect what mortgage providers might offer? For information, my wife and I both have excellent credit records and large sums on deposit with Lloyds TSB and HSBC.
There are a number of ways to look at doing this mortgage. Depending on your son's overall financial position typically the maximum a lender would look to advance him would be 5 x his salary, which would give him an advance around £220,000. However the higher the loan to value (LTV) he would be looking for then the lower the amount lenders would look to grant.
Therefore you could look to use some of the monies you have with HSBC and Lloyds and gift him a larger deposit which would mean the 5 x multiple would be more likely to be achieved. You could also look to go on the mortgage, either as a joint borrower or as a guarantor, at which point the lender would need to assess your financial position as part of the overall position.
There are also lenders who do "Family Guarantor" mortgages whereby instead of you just gifting the deposit monies to your son, you place the funds in an account with the lender who takes a charge over them, and they will then grant a higher LTV mortgage than usual. You then get your money back back at the end of the fixed rate period.
As you can see there are a lot of ways to do this and get your son into his first property, and I do believe it would be worth putting you in touch with one of our consultants who can explain each of the options in more detail, to help you decide which is the best one for yourselves.
If you'd to do so, please let me know and I'll arrange a convenient time for one of them to speak to you.
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