Making a difference
"My son needs some mortgage advice − he is struggling to get onto the property ladder. Can you help him?"
With the increasing value in property over the last few years, this is a familiar tale. Young first time buyers do not have the ability to find a deposit that is sufficient to get them onto the property ladder.
In this case the enquiry came from an exisiting client whom wem had advised on investments and retirment planning. This was a married couple, with a sole child, starting out in life, with a low income as he was in training and they wanted to help him to get onto the property ladder with his first purchase.
The son had no deposit, and no means of gaining a mortgage that was sufficient to buy the flat that he wanted. his option was to rent for the foreseeable future.
When we met the son we discussed his own ortgageoptions and it became clear that e had insuffuicient income to have a mortgage that would be sufficient to buy aproperty, plus he had no deposit.
His parents wanted to gift him the money, but needed their capital for their retirement income and enjoyment − what is the answer?
We eventually turned to the idea of an equity release mortgage on the parents home, which could release a capital sum, this capital could then be 'gifted' to their son which he could use as a deposit on his flat purchase.
Inheritance Tax on a gift.
As we have tax advisers within our office, we were able to clearly explain the implications of the parents making this gift to their son. Our qualified tax advisers worked out all of the tax implications and we outlined this to both, the parents; and to their son. It was then agreed that we move to an equity release product. This enabled the parents to keep their investments intact, whilst helping their son to buy his first property.
The outcome.
Several years later, the son now has an investment property, with a mortgage on a buy to let basis, thereby investing for his own future, and he has gained his qualifications and is now on a higher salary and he has bought a house with his partner which he can now afford as he is on a higher salary now that he is qualified.
Do you see your children or grandchildren, struggling to get onto the property ladder, but you cannot help as you need your investments to provide you with an income? Why not contact us to see if we can help with our 'Freedom Service' to bring freedom to yourself and to your family?
Your clients should think very carefully about this information. If they are at all unsure about which equity release transaction is right for them, then they should ask their adviser to make a recommendation. We also offer advice on home reversion schemes and conventional mortgages, either of these products may be more suitable to your clients own circumstances.