Posted on 18 February 2011 by Julie
Can we help our children? Late 40's working full time and husband late 50's self employed (sub contract to same company and HMRC self assessments record)plus receiving gteed/increasing govt pension. What is the best way to help the children re their own home. Should we consider downsizing and releasing their inheritance to them now or can we guarantor a mortgage for them (they are low earners and 100% sure they will not meet not lending criteria) or should we purchase a buy to property that we can transfer over to them when their income can support the loan. We do want to help them but feel unqualified to make the right decision.
The best way to help your children on to the property ladder will depend on whether or not they are going to be living in the property they purchase?
If they are then your choices are really between guaranteeing their mortgage payments, this will make you jointly responsible for the mortgage being paid but give you no rights or tax liabilities on the property, and releasing equity from your own property to provide a larger deposit. This will leave you with your own mortgage to support and possible inheritance tax liabilities depending on how long you live for.
If the property is to let then income is not so much of an issue and it may be possible for your children to obtain a property on their own. This will depend on their incomes and it may be they are too low for this to be feasible. I only know of one Lender who has looked at guarantors on a Buy to Let mortgage and this was in a very different economic climate, it is quite possible that they no will longer consider this. That leaves you with either releasing enough equity or buying the property yourselves. Please be aware that if you buy the property yourselves and never live in it then there will be a Capital Gains Tax liability.
I believe you would benefit from speaking to one of our independent mortgage advisers. Please call on 0344 346 3672 and tell the adviser the date of your question, they will be able to look at your situation and help you from there.
Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
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