Last year, gifts and loans from the "Bank of Mum and Dad" were estimated to reach 9.4 billion pounds, to help first time buyers get onto the property ladder.
This equates to around 164,000 first time buyers receiving assistance to buy a home, which is around 57% of all mortgages first time buyers.
This figure, has nearly doubled since 2019, and is believed to be due to rising house prices and mortgage rates.
The projected figures are not going anywhere for this current year either, the Bank of Mum and Dad is very much here to stay.
Are you looking to buy your first property?
While I recognise not everyone is in the position to ask the Bank of Mum and Dad for financial help, there are benefits to doing this (i.e. potentially more favourable rates and help getting that important deposit together), and there are financially efficient factors that you and they might not have previously considered.
The best thing to do, of course, is to speak to an adviser, perhaps along with your parents, to find out your options and to get the most appropriate advise and guidance for your situations.
And as a side note, it’s not just about having that decent deposit from your parents, but your employment and credit scores will still play a very big part of your property buying journey.
Are you a parent, looking to gift money to children for a house deposit?
Here are some points to consider…
- If you are gifting money to boost the deposit, we need to be absolutely clear that it is exactly that: A gift. You will need to sign a document to this effect, also stating you have no rights over the property.
- There may be inheritance tax implications further down the road. The annual gifting allowance is £3,000. Any more than that, would be liable for a decreasing inheritance tax should the gifter die within 7 years of making the gift.
- Gifting deposits can sometimes cause friction, especially if you want a say in the type of property your child wants to buy.
- What impact will giving the gift have on your own long term finances?
- Do you need to amend your Will, to take into account any lifetime gifts made, so that your estate is equallised upon death?
- If your child is buying with a partner, speak to them about protecting that share of the deposit in case of a relationship breakdown later.
To book an appointment, you can book directly onto my calendar here or head over to my contact page.
Willow Tree Financial Services are a Financial Adviser firm based in Polegate, East Sussex, UK. We specialise in Financial Planning, Mortgages, Investments & Pension Planning, Protection & Insurance Wills, Trusts & Estate Planning.
Inheritance tax planning, estate planning, trusts & will writing are not regulated by the Financial Conduct Authority.
Will writing is not part of the Quilter Financial Planning offering and is offered in our own right. Quilter Financial Planning accept no responsibility for this aspect of our business.
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