How to help your kids get on the property ladder without always being bank of mum and dad

With the first rung of the property ladder seemingly rising ever out of reach, it’s no surprise that more and more young people are looking to the Bank of Mum and Dad for help when it comes to buying their first home.

Property

 

We’ve all seen the articles by thirty-somethings whose top tips for buying a new home often include receiving large sums from their parents or grandparents, and we can be left feeling guilty when we can’t afford to do the same for our kids. The truth is there’s no need to feel guilty as this simply isn’t a reality for most of us – which is why we want to look at ways you can help your kids get on the property ladder that don’t just involve handing over cash.

 

Our Top (Realistic!) Tips

 

  • Start their financial education early – No, we don’t mean sitting them down for a mortgage lesson before their afternoon nap! A healthy attitude to spending and saving can be taught to even the youngest children via allowances or chore money. Once kids learn to be responsible for their own money (and that no more will come in if they choose to spend it all right away) they should start to develop good saving habits early on.

 

 

  • Start a savings account – A good way to build up a deposit fund is to set up a savings account or ISA for your child as soon as they’re born. That way you can pay small amounts into the account and still build up a sizeable sum by the time they’re old enough to use it. You can also encourage your child to contribute once they’re old enough.

 

  • Help them understand the impact of bad choices – While your little one might have got to grips with saving, helping them understand the long-term impact of things like bad credit can be a bit more tricky. This Costs of Poor Credit Calculator can be a simple way to show them the consequences of bad credit early on and help them make better choices as they grow up.

 

  • Demystify mortgages – As someone who has likely gone through the mortgage process yourself, you’re in a good position to demystify the ins and outs of what can seem like an intimidating procedure. A manageable, step-by-step plan can also help to make everything seem less overwhelming.

 

  • Show them their options – Many young people simply assume they won’t be able to own their own home because they’re not aware of the many schemes and plans open to first time buyers. Do some research into Help to Buy, and other similar schemes, to help them explore their options.

 

  • Look at other ways you can help – If the money just isn’t there to gift a deposit, there are other ways you can help your child secure a mortgage. Guarantor, offset, or joint mortgages are all ways parents and children can team up to buy a house, although we recommend speaking to an independent financial advisor beforehand so you’re aware of the risks that come with these options.

 

 

  • Provide a home – If helping out with your child’s mortgage isn’t an option, simply providing them with a low-cost place to live while they save can be the most helpful thing you can do as a parent. We can’t all afford to house our kids for free but even a small amount of rent can make a difference to both you and them in comparison to the rocketing prices of renting from a landlord. For an extra helping hand, you can even put a bit of their rent away in a savings account of your own and gift it to them later as a surprise.

 

The property market can feel more confusing and exclusive than it ever has before, so starting your child’s financial education early will put them in the best position to one day own their own home. If you or your child need any more help on which savings or mortgage option is best for you, please contact your local mortgage advisors.

 

 

 

 

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1 Comment

  1. Tracy Albiero June 11, 2018 / 3:45 pm

    This is great. It is never to early to start. We have an account for our little one. Half of all birthday and chore money goes into the bank. The rest she can play with. Never to early to start. #anythinggoes

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