ASK THE EXPERTS

HAMPDEN & CO’S GRAEME MORRIS JOINS US TO ANSWER A QUESTION ABOUT GUARANTOR MORTGAGES.

MY DAUGHTER HAS JUST ENTERED HER FINAL YEAR OF UNIVERSITY AND IS LIKELY TO END UP WORKING IN LONDON NEXT YEAR, WHAT ARE TAX EFFICIENT WAYS I CAN HELP GET HER ONTO THE PROPERTY LADDER?

ANSWER: According to the UK House Price Index for May this year, the average cost of a first-time property in London in May was £418,735. Meanwhile, the average graduate salary in the city was £27,000. That’s a ratio of 15:1. While London is an extreme case the average property price in Edinburgh was £251,731, so it is an issue not confined to the south.

Small wonder that there’s so much talk these days about the Bank of Mum and Dad. We see this frequently at Hampden & Co. Affluent parents are increasingly frustrated by their inability to help their children to be able to buy their first home, other than by buying a property outright for their child. But as soon as we get into that territory, the shadowy clouds of stamp duty, capital gains and inheritance tax begin to gather.

As a result, we’ve noticed a growing demand for guarantor mortgages which many mainstream lenders no longer offer, and when they do it is purely to allow the guarantor to ‘guarantee’ the risk, not to support the actual repayments. They’re put off by the increased regulation around affordability and it doesn’t fit into the prevailing ‘tick box’ model that so many institutions now rely on.

Of course, that’s not the case at Hampden & Co, where decisions are always made on an individual basis. We don’t just look at income – we take into account the overall income and assets of both the child and the parent (or another combination of family members) to ensure we can find a solution that is comfortable for all concerned. Please remember that all borrowing is subject to status and is only available to persons of 18 or over. Security might be required for borrowing in the form of a charge or standard security over land.