The property ladder: how to give your loved ones a step-up

In an era where property prices pose significant barriers to home ownership, parents, grandparents and family members have a unique opportunity to support their loved ones in achieving this milestone.

You can play a vital role in helping the younger generation onto the property ladder, including financial assistance, strategic planning, as well as innovative borrowing solutions like the joint- borrower sole-proprietor (JBSP) mortgage.

Financial support

If you have the means to provide financial support, there are a variety of ways to help your loved one purchase a property. Whether through outright gifts, loans, or other strategies, financial assistance can significantly ease the burden of accumulating a substantial deposit or meeting stringent mortgage requirements.

By gifting or lending funds for a deposit, you can enable the homebuyer to access more favourable mortgage terms, reducing interest rates and therefore monthly repayments.

Strategic planning

Beyond financial support, you can offer your invaluable guidance and strategic financial planning to navigate the complexities of property buying. By leveraging your expertise and network, you can help your loved one to identify promising investment opportunities, understand market trends, and negotiate favourable terms.

Moreover, you can instil financial literacy and prudent budgeting habits, empowering your loved one to make informed decisions and manage their finances responsibly. By fostering a culture of long-term financial planning and disciplined saving, you can equip your loved one with the tools to achieve their home ownership goals independently.

Support with a joint-borrower sole-proprietor mortgage

First-time buyers with limited income or savings can find getting on the property ladder particularly challenging, as they will be restricted on how much they can borrow.

A joint-borrower sole-proprietor (JBSP) mortgage is a way you could help a homebuyer increase their affordability without handing over any cash. In a JBSP mortgage arrangement, you act as a joint borrower alongside the homebuyer, leveraging your income and creditworthiness to secure a larger mortgage or more favourable terms for the homebuyer.

Unlike traditional joint mortgages, only the buyer will own the property, making them the sole proprietor. You would be on the mortgage as a joint borrower. This approach means your loved one retains full ownership and control over the property, while benefitting from your financial support.

Benefits of a joint-borrower sole-proprietor mortgage

• For the parent, grandparent or other family member– It is an opportunity to support your loved one in securing a home without directly gifting or loaning funds. Instead, you can leverage your financial standing to help the next generation to access mortgage financing. Additionally, by not having a legal stake in the property, you can mitigate potential inheritance tax implications and maintain your loved one’s financial independence.
   
• For the next generation family member – The JBSP mortgage offers a pathway to home ownership with fewer financial barriers and improved affordability. By accessing larger loan amounts or more favourable mortgage terms, your loved one can secure their desired property without having to use all their savings or compromise on their lifestyle. Moreover, by retaining sole ownership of the property, they maintain autonomy and control over their investment, enabling them to build equity and wealth over time.