If you are a first time buyer, the process can be daunting. We can help with this by making the process as clear and transparent as possible. 

We are happy to explain the process for you from start to finish and are always mindful that this is a new experience for you.

If you are thinking of buying a property and don't know where to start, feel free to give us a call for a chat.  

INFORMATION FOR PARENTS GIVING FINANCIAL HELP

With lenders currently demanding that buyers provide bigger deposits it is harder than ever for first time buyers to get their foot on the first rung of the property ladder.

We are increasingly seeing parents coming to the aid of their children by providing help in the form of a financial contribution. They do this either as an outright gift, or as an investment in the property itself, or occasionally as a formal loan.

A brief discussion of Gifts, Making an Investment and Making a Loan follows: -

A Gift

The most frequent form of help is an outright gift. Exactly how to make the gift is important and when the parent or parents are helping a child who is buying property with a partner or friend, it is important to plan for some possible eventualities. Parents are advised to ensure that their child retains the benefit of their gift in the event that the relationship between their child and co-owner breaks down, and sadly, this does happen. 

As a measure of protection the buyers should enter into a declaration of trust which sets out the relative contributions of each party and dealing with the split of the proceeds of sale and the conduct of any such sale. This provides an invaluable framework in what can be an extremely stressful time for all.

The donating parent should also obtain Tax advice as to the gift.

Making an Investment

If an investment is made, the parents will own a share of the property.

As with any investment, the investor should make sure that the money invested will not be needed for a certain period of time, agreed with the buyers.

It is of course important to have a formal agreement dealing with the sale of the property and the distribution of the profits (and losses in the event that the sums owed which are secured against the property are greater than the net proceeds of sale).

Making a Loan

Less often, a formal loan agreement with contractual terms may be entered into. This loan may then be secured against the property as a second charge (ranking behind the Bank’s or Building Societies’ legal charge). The advantages of this are greater certainty and security for the parent making the loan.

Whether giving a gift, making an investment or making a loan, it is important that all parties to the transaction have their wills up to date.