Posted on 2 March 2013 by Angela
My husband and I would like to help our daughter get onto the housing ladder in an expensive part of the country with a min purchase price of around £200k. Her salary is £25k and she has around £15k saved for a deposit - what is the most effective way to help her? Joint mortgage or Guarantor or are there other options? I fear being only a guarantor will land her with a mortgage she can't afford.
There are a number of ways that you can now look to help your daughter onto the property ladder, other than the traditional guarantor route.
You are right to be concerned that she could have a mortgage she couldn't afford, as if we look at taking the deposit from the £200,000 price, then she'd need a mortgage of £185,000 which on a £25,000 salary is over 7 x income, and in no way affordable on her own.
You could look to go on the mortgage with her, but not on the title deeds in what is known as "Joint applicant / Sole proprietor" application. This way yours and your husbands incomes would be assessed as part of the affordability calculation with your daughter, and all three of you would be 'jointly and severally responsible' for the mortgage.
There are also an increasing number of "Family Guarantor" schemes comining onto the market, to help First Time Buyers get onto the property ladder. These are schemes whereby you can still help your daughter by using any funds you have to lower the mortgage amount needed, but you still retain control of the monies. Basically instead of gifiting her a larger deposit, the lender holds the extra monies and then releases them back to you at a future specified date. Some of these schemes also see you using your own property as a means of guaranteeing your daughter's loan.
There really are quite a number of alternatives to the standard guarantor mortgage, and it may well be worth having an initial discussion with one of our consultants, to look at which option is more preferable to you.
If you'd like to do so, please let me know and I'll arrange a suitable time for your to speak to one of them.
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