With property prices at record levels it is getting increasingly difficult for first time buyers to get on the housing ladder. However this also means that many parents are sitting on property which has large equity and low mortgage payments.
Many parents are now helping the grown up children get on the property ladders by offering deposits for property.
Although it is now possible to obtain 100% mortgages to cover the complete cost of the property, these inevitably cost more in interest and other associated charges. You will always have a much better choice of lenders and mortgage products if for example you have a five or even better 10 percent deposit.
Parents now often look at re-mortgaging their property in order to raise the capital for their children’s deposit. This is a relatively straightforward process.
Another option is to use an equity release scheme. One of the most popular equity release schemes is the lifetime mortgage, which is where you take out a loan secured against a fixed percentage of your property. You do not have to pay this back during your lifetime, but the property will have to be sold on your death. Great care should taken when looking at these schemes as an example if you took out a 25 percent life time mortgage on your home and you lived a long time your beneficiaries could be left with nothing.
Which ever option you take it is recommended that you get advice from an independent financial advisor who will be able to offer advice from the whole market on the options available to you.
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