How To Help Your Loved Ones Get Onto The Property Ladder

 

Get onto the property ladderHow do you help your loved ones get onto the property ladder? Finding enough money for a deposit is often the biggest barrier for borrowers trying to get on or move up the property ladder. As property prices have increased, so has the deposit requirement for a property purchase, making it difficult for many buyers, particularly younger people to find the funds required without help. If you have a loved one, including a child or grandchild who is trying to buy a property and is struggling, there are lots of ways you can consider in order to help them.

Ways to help them buy their first property

There are number of options available as many first-time buyers rely on the ‘Bank of Mum and Dad’.

  • Gift or loan the money from your savings
  • Buy the property for them
  • Be a guarantor
  • Help with the mortgage – offset or joint
  • Take out an equity release mortgage

Think very carefully before you lend a helping hand

However, if you want to help your loved ones get onto the property ladder, you should think very carefully before making any decision, as helping your child buy a home could have a significant impact on your finances in retirement. If you do want to lend a helping hand in any of the ways we identify, you will need to protect your own interests as well as those of your loved ones.

Saving for a property can be a long and challenging process

Although the Bank of Mum and Dad was already firmly established prior to the pandemic, it seems that parents and grandparents have been more than willing to help during the crisis and continue to do so. Getting on the property ladder for the first time is more difficult and more expensive than ever. Living costs are high and salaries are relatively low in some cases, which can make saving for a house a long and challenging process.

Can you help your loved ones onto the first rung?

In order to ascertain whether you can help, consider the following questions:

  • What is you own financial situation?
  • What is your relationship with your children?
  • Why do you want to help?
  • How would you like to help?
  • Do you qualify?

Buy the property for them

If you have the means to do it, you can buy a house for your child. This would mean that you buy a second property. It has many benefits including giving them a place to live and saving money on rent. You will need good advice in order to minimise the amount of tax and fees you pay and when the time comes for them to inherit that the inheritance tax they pay is minimized.

Give a gift from your savings

You could gift from savings and in this way you could increase your loved one’s deposit. This could help them get a better mortgage deal. Your child or grandchild won’t have to pay tax immediately on the gift, but may have to pay inheritance tax later on.

Loan the money

You will need to set up a loan agreement to include the amount, any interest and the time period of the loan. You should also include details as to what happens if one of the parties dies or you perhaps need the money back. The mortgage lender will need to know that this is a loan.

Be a guarantor

You act as guarantor for the mortgage debt. If your child or grandchild cannot make a mortgage payment/s, it will be down to you to pay.

Ways of helping with the mortgage:

Offset mortgage

You can offset your savings against your family member’s mortgage, thus reducing the interest they pay.

Joint mortgage

Another option is to buy the property together by way of a joint mortgage. Here you are equally responsible for repaying the mortgage. There are some downsides to this including:

  • Stamp Duty – you may have to pay the full amount
  • Capital Gains Tax – there may be implications when the property is sold

Equity Release

This is when you release the equity in your home. This is released in cash to spend as you like including helping your loved ones onto the property ladder. The downside of this is that it could have an impact on the amount of inheritance you leave, although on the other side of the coin, it is a way of giving your loved ones their inheritance early.

How can Paxton Equity Release help you?

If you do decide to take the equity release option, you should look for an adviser with a wealth of experience and a host of recommendations. Please call Martin on 01892 617070 for a chat or email martin@paxtonuk.com. Martin will discuss your options, and will let you know if an equity release mortgage is the right choice for you.

Get onto the property ladder

 

A Good Equity Release Adviser

A good equity release adviser is essential if you are thinking of taking out a lifetime mortgage. You really want to have a fair and honest opinion as to whether this type of mortgage would be the right option for you. It’s true that equity release mortgages are becoming more and more popular. They can free up cash from your home, which you can spend on things that you want to do in your retirement or even relieve financial pressures. Consequently, there are a growing number of companies and advisers offering this type of product. And as with most things there are some unscrupulous people out there and so it’s good to be cautious. You do want to be dealing with an adviser who is looking out for you and has your interests at heart.

Advice on the mortgage that is most suited to your needs

In the latest blog from Paxton Equity Release, we look at things a good adviser will be doing and saying. We also look at the questions that you should be asking your adviser. It’s important that you take guidance from an independent financial adviser who has a specialist qualification. A good equity release adviser will be able to suggest the plan that is most suited to your requirements and also to tell you if equity release isn’t the best option for you.

A good equity release adviser should:

  • Search the whole market to find the right plan for you
  • Be on the Financial Conduct Authority register
  • Be a member of and on the Equity Release Council Member Directory
  • Help reduce the costs to you
  • Protect your family’s inheritance
  • Encourage you to discuss this with your family
  • Advise if equity release is not for you

A dramatic rise in the number of products on the market

Searching the market is very important, as due to the rise in demand for this type of mortgage, the number of products has risen dramatically. At the beginning of 2019, the Equity Release Council listed over 220 products that are now available. This figure was almost double the number of products 12 months previously. It is therefore imperative that your adviser searches for the equity release mortgage, which is the most beneficial to your requirements.

Competitive interest rates and the lowest charges

Your adviser should be looking for the loan with the most competitive interest rates and the lowest charges. This could include finding a plan with no early repayment charges. This would mean that if you do want to downsize, you can pay off the loan without penalty. There are also mortgages where you can take out the equity when you need it, and not in one large lump sum.

Maximising the value of your estate

With an equity release mortgage, your home is usually sold to pay off the loan and so there will be less of your estate left after your death for your family. A good equity release adviser should explain how you can maximise the value of your estate. They will also definitely encourage you to discuss this with your family.

It’s really not the best option for you

A conscientious adviser will tell you if an equity release mortgage is not the best option for you. There may be other methods that would be more beneficial to you and your family. These could include downsizing, or other forms of borrowing such as remortgaging or getting help from your family.

Questions you should ask your adviser
  • What their fees are?
  • What type of equity release products they offer?
  • Any other fees that are applicable such as legal, valuation and set up?
  • Do they offer an after sales service?

Ask friends and family to recommend a good equity release adviser

With this market growing, it is vital to get the right adviser. Ask friends or family to recommend a good equity release adviser. Alternatively, check out their website and testimonials.  An after sales service is helpful as sometimes a more suitable plan may become available and a good adviser will let you know if it does.

Can Paxton Equity Release help me to get a lifetime mortgage?

If you are looking for an adviser with a wealth of experience and a host of recommendations, please call Martin on 01892 617070 for a chat. You can also email martin@paxtonuk.com Martin will discuss your options, and if you are eligible and will let you know if an equity release mortgage is not the right choice for you.

Martin is a good equity release adviser and will go through your options.

Do you have an interest only mortgage and your lenders want their money back?

Interest Only Mortgage

Are you in the situation where you have an interest only mortgage? Perhaps the mortgage term has expired? Or maybe it is about to expire and you still owe money with no means of paying it? It’s a dilemma that many people are finding themselves in. However, it’s vital that you do not bury your head in the sand regarding this issue. There are solutions and the more quickly you address it, the better it will be. In the latest article from Paxton Equity Release we look at the different options that are available to you. These include practical solutions so that you can deal with your mortgage and have the money available to repay the outstanding balance.

Interest only mortgages explained

Interest only mortgages were more popular in previous years than they are today. Monthly payments were made to go towards the interest on the mortgage and not on reducing the total amount owed. With this type of mortgage, monthly repayments are much lower. The expectation is that people have the means to pay the balance at the end of the mortgage term. Buyers are really gambling on the fact that house prices will rise and the house can be sold to pay off the debt.

An endowment policy was often taken out with the mortgage designed to pay back the full amount at the end of the term. However, unfortunately these were often poorly managed and didn’t cover the amount owed when the mortgage had to be paid back in full, leaving many people with no means of paying the loan back. Others means of repaying could be a savings plan such as an ISA, pension or investment fund or a lump sum such as an inheritance or part of a pension. Alternatively the property could be sold with an option to downsize.

Options to consider if you want to keep your home

 But, what happens, if you find your self in this situation and don’t want to sell and want to keep you home? There are several options you can consider.

  • Switch to a repayment mortgage
  • Switch to a part repayment and part interest mortgage
  • Consider equity release

With the first 2 options, your lender will have to ascertain that you will be able to make the repayments. Older homeowners may find that banks are less willing to do this, as there are rules which restrict lending into retirement.

Equity release to pay the outstanding monies on your mortgage

With equity release you repay your interest only mortgage by getting a lifetime mortgage. Taking out this type of mortgage will allow you to stay in your own home. It is becoming increasingly common and a popular choice for older homeowners who live in the UK and have a leasehold or freehold property. However, you will have to fit several criteria to qualify.

  • The youngest person, if a couple, must be aged 55 or more for a lifetime mortgage
  • You will need a high amount of equity in your property
  • Your home needs to be valued at £70,000 or more
  • The property needs to be your main residence and in good condition and of standard construction

How can Paxton Equity Release help you?

The sooner you address the problem, the easier it will be for you. You’ll also have peace of mind that a solution has been found. If you are over 55 and feel that an equity release mortgage could be for you, it’s worth talking to Martin. He will make sure you understand what your commitments would be and whether it would be the right choice for you. At Paxton Equity Release we want to ensure that you have all the facts and the knowledge about equity release. This will ensure you have the confidence to make an informed decision. Please call Martin on 01892 617070 for a chat or email martin@paxtonuk.com

Think carefully about this information before deciding whether you want to go ahead. If you are at all unsure about which lifetime mortgage is right for you, you should ask your adviser to make a recommendation.

Releasing Locked In Funds From Your Home To Ease Financial Pressures

Are you feeling the pressure of a shortfall in income? If so, you may be asking whether an equity release mortgage could be used to supplement your income? This would enable you to raise much needed cash and give you the financial support you need. It’s a question that doesn’t have a straightforward answer. There are many factors governing whether releasing equity from your home during and after these unprecedented times is a good thing to do and the right thing for you. Equity release was certainly growing in popularity before the pandemic. This enabled many people to unlock the value in their homes and it could give you the opportunity of releasing locked in funds from your home. The FT Adviser predicts that equity release will continue to boom with the FCA seeing an increasing demand for later life lending.

You may find yourself thinking about an equity release mortgage for a number of reasons:

  • Dividend shares have been stopped/cancelled or are less than usual
  • Your investments and shares are worth less and it’s not a good time to sell
  • Family members need some financial help
  • You want peace of mind of being in charge of your finances
  • The crisis has made you evaluate your life and look at things differently

Are you worried that your income is being affected by COVID-19?

Are you worried that your income and your pension fund income have taken a pounding? You could look at equity release to help you out of your current situation. There are different types of equity release options. Some allow you to draw a monthly income and others where you draw an initial lump sum and perhaps an agreed sum later on.

Equity release can give you the financial flexibility you are looking for

It’s possible to release equity from your home if you meet eligibility criteria. However, it’s a decision that shouldn’t be taken quickly or lightly, although it can ultimately give you the financial flexibility that you are looking for. If you are a homeowner over the age of 55, this will allow you to release some of the wealth that has been built up in your property. The debt is then repaid when you die or move into long term care.

If you are thinking about equity release, make sure you:

  • Take your time to make your decision
  • Make sure you fully understand what equity release entails
  • Ensure you receive individually tailored advice
  • Consider it as a long term transaction
  • Are confident equity release is suitable for your circumstances
  • Discuss with your family and friends

How can Paxton Equity Release help you?

Martin from Paxton Equity Release will be delighted to go through your options to see whether equity release will meet your needs and circumstances and be the right choice for you and your family at this current time. If you would like to know more about releasing locked in funds from your home, please call Martin on 01892 617070 for a chat or email martin@paxtonuk.com

Paxton Equity Release – still open for business

In this unprecedented time, the coronavirus is clearly changing the way we live. Naturally, at this time, the primary concern for everyone is health and protecting those who are most vulnerable. However financial wellbeing is also an issue, so Paxton Equity Release remains open and available to answer any questions about your mortgage.

To talk about this in more detail, call me, Martin on 01892 617070 today or ping me an email to martin@paxtonuk.com