Not one of us would be here right now if it hadn’t been for our parents to guide us through difficult times. And difficult times come every so often. From our school years and college all the way into our adult years, parents are the backbone of our prosperity.
Still, if there is one thing that equates with adulthood, then that is buying a property. Nothing quite beats it, not only because there is money at stake but because we don’t have too much space to change our minds. Getting onto the property ladder is a complex endeavor and it takes a lot of consideration. Luckily, there are things parents can do in order to help their child buy a piece of property.
This is one of the biggest obstacles first-time buyers face due to large deposits, high prices, and affordability checks. In those cases when parents don’t have enough cash in their savings account to lend or give to their child, there are mortgage options likely to provide a viable solution.
By agreeing to a guarantor loan, you agree to pay the amount that your child may be missing in order to be fully able to purchase a flat or a house. Both yours and the assets of your child are assessed so that the lenders can be sure you are able to fulfill the obligations.
Just like guarantor loans, you can consider mortgage loans. However, before venturing into this, make sure you have considered the risks. Since these mortgages imply that a parent guarantees the mortgage debt, in case repayments are not made on time, parents are the sole guarantors and they are under obligation to cover the debt.
The whole burden of debt doesn’t have to fall solely on the parents. Joining forces in order to buy a property not only decreases the chances of being turned down by banks due to low income or small deposit, but it also provides additional security through avoiding the lender’s mortgage insurance. This leaves both the parents and the child with a smaller financial burden and as a result, enables them to plan ahead and maybe even consider retirement living.
Parents who want to help first-time buyers but still want to have a dose of security can opt for financial agreements. With these agreements, parents can simply agree to loan a sum of money and sign a legally binding contract that will specify how they want to be repaid and when.
While this may not be the most popular of solutions, it still means that parents will simply be left without the amount, provided that the child fails to meet the deadlines. When push comes to shove, it’s better than being burdened with interest rates and other commitments toward banks.
Perhaps the most simple and yet the most precarious solution is to simply give the child a financial gift. As generous as this may seem, you do have to take several things into consideration.
The first one is the matter of the child’s ability to use the gift in the best possible way without it all going to waste. This implies being mindful of a divorce (provided that your child is married), the child’s history of financial habits, and other risk-bearing factors. On top of that, parents have to make sure the gift doesn’t impede on their own financial security. Last but not least, you have to check whether the gift fits the amounts not included as income because there is a chance a financial gift is taxable.
In an ideal world, there is no need for children to ask for any financial boost once they start earning their own living. Unfortunately, we are living in a world where even the parents are finding it hard to keep the roof over their heads. In any case, it is making our loved ones happy that matters and if money is one way of achieving that, then make sure you are using it most wisely.