Mortgage Adviser Advice – Can my parents help with my mortgage?
There are loads of different ways where your parents will be able to help you get a mortgage. Read on to find out what they are!
Across the property market, there are thousands of different mortgage advisers and lenders showing you deals that they believe are going to help you save money. While some of these offers can be great, sometimes you just can’t beat a bit of help from good ol’ mum and dad. Over this article we’re going to show you a few different ways in which your parents can help you get a mortgage! Right, let’s get started.
Gifting a deposit
Most mortgage advisers will tell you that your parents gifting a deposit to you is probably the easiest way of them helping you through your mortgage. This is essentially a lump sum that is gifted by your parents to their children with no obligation to repay the money.
Why is this such a good thing for the recipient? By gifting a deposit, borrowers can get a far better mortgage deal. Especially if this increases to an amount which is in excess of 15% of the property’s value.
So, how might you go about proving that the money you’ve received is a gift? This will normally take the form of a signed declaration which should clearly state that the person who is gifting the money accepts that this is a true gift & they aren't expect any part of the money to be repaid and they will have no interest in the property. Sounds like a pretty good option doesn’t it? Let’s see what else there is that we can take a look at!
Another option that mortgage advisers will tend to advise is for you and one of your parents to buy into a property together and take out a joint mortgage. What this means is that the child will be able to buy a more expensive house as the joint sum of the owner’s income is taken into account by mortgage lenders when they’re deciding how much you can borrow.
The great thing about this is that you’ll be able to live in a far better property than what you could afford on your own accord. However, this does have its shortcomings. This is likely to only be an option for you if your parents are still in work or recieve a decent private pension. Also, lenders will have to look at how old they are as there is a large possibility that they may decline if your parents are above a certain age. If your parents have their own residential mortgage then this will be factored into the affordability calaculator, which could still render the mortgage not affordable.
What we recommend you do is go and speak to your lender or a mortgage advisor for some advice on the matter. As well as these potential problems that we’ve flagged up, a lot of mortgage providers are going to be hesitant to grant second mortgages to your parents. But, the reason why it’s so vital to speak to them is because this is all going to be relevant to yours and your parents’ financial situation.
Another thing that parents can do is lend you money. While this won’t quite have the same gloss on it as gifting someone a deposit, it can still be a great asset.
This is going to be something you’ll still have to talk to your mortgage lender about. Although it may mean that the money you borrow from your parents may come without interest, in the eyes of your lender they are still going to count this as a loan. Therefore, mortgage advisers will tell you it’s going to be something that you’ll need to put down on your mortgage application.
Though be warned, readers! While this can be a great help, lenders may add repayments to your monthly outgoings as part of their affordability assessment. This could then impact the deal that they give you and what rate of interest you get. But, where there’s a will there’s a way! If you save a big enough deposit, then most mortgage advisers will tell you that this is the best solution to any problems you might encounter with getting a good mortgage deal.
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