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It is common for buyers to obtain help towards their purchase, often from the ‘Bank of Mum & Dad’ however, what are the options and potential pitfalls?

  • Gift money – you will need to be aware of inheritance tax implications and take appropriate advice.
  • Loan money – your Solicitor can draw up a formal agreement. You could agree that you get your investment back after a certain time or once the property has been sold. Any mortgage company involved would need to agree to such arrangement.
  • Use your existing property – using equity from an existing property could be a way to pass on inheritance early. This is not always a straightforward exercise so please do seek advice beforehand.
  • Be a party to the proposed Mortgage – there are a number of Mortgage products available such as Guarantor Mortgages, Joint Mortgages, etc. It is vital that you understand that with some of these deals you will be liable to cover monthly mortgage payments.

It is important to understand the risks involved in helping and you should consider the following;

  • How much can you really afford to help with? This is not just in relation to your current financial situation, but where will you be in 5, 10, 15 years time?
  • Obtain professional advice from a trusted Property Solicitor and other trusted advisers.
  • Ensure that you fully understand all the terms and conditions of any mortgage liability.
  • Take time to have serious conversations with all parties involved and cover possible outcomes such as separation or financial issues.

At Lamb Brooks Solicitors we work closely with all our Departments so that the bigger picture is considered. If you are considering lending a hand please contact our Property Law Team who will liaise with our Family and Private Client Departments where appropriate.

For further information please contact Melanie Roberts, Solicitor on 01256 305516 or email melanie.roberts@lambbrooks.com.

Property Law Team office is open Monday to Friday, 9:00 – 17:30 on Victoria Street at the top of town.

Tel: 01256 305516   Email: property@lambbrooks.com.

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.