Team up to get your children on that ladder...

parents wanting to help their children. However, stamp duty surcharge which would normally be payable by the parents doesn’t apply in the case of JBSPM because they are not named on the title deed.

Equally, stamp duty has been abolished for first time buyers purchasing a home up to £300,000 or the first £300,000 of a £500,000 property in more expensive parts of the country.

For those who can’t afford a property on their own or have suffered a life event and need a boost from parents JBSPM may therefore be an attractive option.

Figures from Legal & General released in May revealed that the Bank of Mum and Dad continues to be a top ten UK mortgage lender and is set to lend £5.7 billion in 2018 to children buying in the UK.

And it does not end there. June figures from Lloyds Bank identified how a third of Second Steppers need an average of £25,450 support from family and friends to help take the next step towards their dream home. How then does it work in practice? Parents can help their child by applying as a joint party to the mortgage and using their income as part of the affordability assessment. They would be jointly and individually liable for the mortgage along with the occupiers in maintaining the payments so if the first applicant misses a mortgage payment, it’s down to the second applicant to pay it in full.

This would be until the children earn sufficient to take over the mortgage in their names only. Whereby the parent would be released from the agreement.

The parent second party would not be released until this was the case.

Also bear in mind that by not being named on the property title should the house increase in value the second party would not be entitled to any of the growth.

Ideal perhaps for those that want to keep that empty nest, the children otherwise, having already left once for university, only to have their freedom removed when they have to return home, unable to afford a property even though they are on a good career path following an excellent education, having to wait years until their salary and savings are at a level whereby they can raise enough deposit and pass the affordability calculations to finally get on the housing ladder.

In addition, should parents wish to assist with a deposit by unlocking the wealth within their own home, then the over-55s have the opportunity of turning to lifetime mortgages, a form of equity release, essentially a long-term loan secured on the property.

Lifetime mortgages are increasingly offering homeowners a common sense, tax-efficient way to consolidate debts, or to help younger family members via a living inheritance, a contribution to education costs.

Especially if the money provided would only disappear in Inheritance Tax after death – who wants to see this happen? Worth pondering. Trevor Law is managing director of Eastcote Wealth Management, chartered financial planners,

based in Solihull. Email: tlaw@eastcotewealth.co.uk

The views expressed in this article should not be construed as financial advice