To ask you for everything you know about Child Trust Funds

[vincentseyes]

Hi there,

Posting in AIBU for traffic mostly.

Bit of backstory - I'm 17, 18 early next year. A year or so ago my parent mentioned that I had a Child Trust Fund though she didn't know how much was in it. I'm just wondering how it works, and how much (on average) money there is in it? (obviously unreasonable to ask anything specific, but there's a big difference between £50 and £5000 for my life, though of course I'd be grateful for either).

I'm also wondering if I need any kind of evidence / information. I'm no longer in contact with either of my parents, will that affect anything and do I need to get any information from them to access the money?
Can I look at any account balances before I turn 18, and will the pandemic have affected any of the money in there? Sorry if a stupid question, I'm just not especially knowledgeable on this area of finances.

Was also wondering if the fact that some of the money would go to a house deposit and if it were the majority of the deposit, would that make me less attractive in relation to getting a mortgage? I'm a full time student but I'm married to someone who works full time, and the house might end up in his name depending on my credit score.

If anyone has any info on CTFs, I'd be very grateful. Thank you!
x

@littledrummergirl Fair enough honestly - it's still some money from the govt. which is always a bonus in my book!

OP, seeing an IFA is a good idea. Try to go on your own without your dh. The IFA should be your advisor alone to ensure that Your financial interests are protected, and you get impartial advice as an individual.

Assuming you are able to track down the CTF provider, the IFA will be able to advise you what is the best investment to park your money until you are ready to buy the property, considering your investment time horizon.

Putting it in bank deposit will barely earn you any interest at all in today's ultra low interest rate climate. You would basically just be protecting capital if you leave it in cash, which is wise if you needed it to pay the deposit in say a year's time. If it is a longer time horizon, like a CTF which is 18 years, I personally have always gone with stocks and shares, even for my dcs' CTFs, which are now easily more than double the amount originally invested. In addition to the £250 from the government, I have contributed about £70 a month (which was their child benefit) and increased it to £100 recently, with additions from their grandparents and small birthday cash. It was invested in unexciting index-linked funds and I far from maxed out their yearly allowance.

If your mother invested the sum in a stocks and shares CTF and contributed the child benefit amount steadily over the years, I would expect that you should have a few tens of thousands in there. The latest blip due to COVID will in no way wipe out the gain in value over 18 years of growth. I hope she invested in a bog standard stocks and shares CTF.

Sorry if I missed it but is your dh much older than you? You said he is already working. May I ask what you are studying. You take care of yourself.

@blueshoes He's 20 right now, he'll be 21 before I'm 18 but not a huge gap. I can't say what I'm studying at the mo as it's quite outing, but it's related to Psychology and should be a foundation for shortening the length of my degree!

I think she will have invested in something reliable - she's quite a smart & forward thinking person so I think it'll be dependable stocks (providing that's the kind of CTF I have!). If her guesstimation was 10-20k I'm expecting the lower end after Covid as it's better to manage my expectations, though hopefully it will start to increase again as lockdown eases.

Thank you for the advice re; the IFA, very useful stuff! xx

@vincentseyes yes, I really don’t think it’s a good idea. I don’t know a lot about the legalities, especially in Scotland, but I don’t think it can be a good idea to be putting down all the capital for a mortgage you won’t be on? Tenants in common is for when you’re also on the mortgage.

Credit score doesn’t tend to have much of an impact, it’s just an arbitrary set of numbers. Experian, Equifax and Call Credit have their own numbers. Your actual report is important - CCJs, missed payments, lots of debt - that’s the important bit.

At the very least, speak to a broker. And don’t do something hasty just to avoid spending money on rent.

@MustardMitt When you say the tenants in common things is for people both on the mortgage, is the joint tenants thing the same?

Neither my husband nor I have any debt, CCJs or missed payments. We're pretty much blank slates, he I think has a relatively average credit rating (I'm not sure what I have but I imagine it's not particularly impressive). If we had a joint mortgage / ownership, would I have to pay towards it even if we were married or I wasn't working? x

Once you have a mortgage, the company doesn’t care who pays for it so long as the payments are made!

I’m not really clear on the tenants thing to be honest - I work in mortgages but on the banking side rather than the legal side - but my understanding was that you can’t be on the deeds if you are not party to the mortgage, which (I believe) would include tenants in common or joint tenants. I could be wrong though - speak to a mortgage broker, they can explain it to you better than I can!

@MustardMitt Thanks for all your advice! I'll have a chat to the husband and see what he thinks is best, and plan to have a chat to a mortgage advisor after my birthday (after all, if the money is £250 or less it'll be a hell of a long time before this becomes an issue, for example!)

[quote vincentseyes]@DumplingsAndStew Ah shit, sorry to hear that! Do you have the stocks type of CTF, and is that in relation to the pandemic do you think? When you say depreciated do you mean it's lower than the original government sum, or it's 20% lower than your statement from the previous year?[/quote]
The balance in March this year, then the monthly payments I have made since - but the actual total right now is only 80% of that figure. It's in the 'risky' investment type account, which I think I remember they move the money out of when she is 16 or 17?
I'd definitely say it's related to Covid. Or maybe Brexit, but it was looking on track in March statement.

I agree. You should track down the CTF first to see how much is there.

Banks are expecting 15% deposits at the moment which for a property worth £200K is £30K. There is no harm speaking to a mortgage broker now to get an idea. The key issues are how much money can you put down for a deposit and will you be working soon or is it going to be in 3-4 years' time, in which case you are looking at a mortgage just based on your dh's income.

This determines the size of the mortgage and in turn the property you can afford.

I presume you are legally married to your dh i.e. you have the piece of paper. I am assuming the marriage is strong and you trust him. If so, I don't see a problem if you contribute the bulk of the deposit but he makes the monthly repayments whilst you are studying. Your contributions should even out over that time. A marriage is a legal and financial partnership and provides a framework for a couple to pool their resources. Make sure you are on the title deeds, as a precaution. If both of you are blank slates credit-wise, I don't see why you won't be allowed on the title/mortgage particularly if you are contributing the deposit. The legal position (joint tenants v. tenants-in-common) is tempered by marriage. Therefore, if you divorce, you can get 50-50 even if you are not on the title. Similarly, your dh may get a share of the property which is more than what he paid in monthly repayments.,even if he did not contribute a deposit. In other words, he is 'entitled' to your deposit on a divorce. But that is marriage. I am not sure whether Scottish rules are different.

[quote vincentseyes]@tickly Yeah so DH has been in the job he's in right now (emergency worker, relatively respectable) for about 2 years and he's been in employment prior. But obviously I don't work currently, and I haven't done previously which I'm concerned about in relation to a mortgage - we were considering getting a joint account that he gets paid into and we'd pay out of in an attempt to boost my credit score, but not sure if that would actually work?
Neither of us have credit cards as well, which I don't know if it's a good thing or not.[/quote]
@vincentseyes I'm not sure. There are plenty of mortgage brokers around who you could try to ask for info or ask direct from a bank. The most important thing for you is to first protect any investment you make in the property (initial input from the CTF for example and payments you later when you are working) and secondly to understand what your obligationa are viz repayment of a mortgage and what happens if you don't. Good luck and keep asking for information.

Don't ever, ever put your money into a house that isn't in your name.

My DS is 12, I'm not sure how much is in it, there was about £2000 a couple of years ago. I put in £20 a month.

@blueshoes

OP, can I just say that you sound like a lovely and mature young lady. You may not know much about finances but you are making an effort to learn. Frankly, what person who is 18 years or younger knows about mortgages, CTFs or JISAs. There are grown ups who are clueless, my dh included.

You write very well and none of the txtspk of teenagers of my ds and dd's age. If you weren't estranged, your mother ought to be proud of you. You will do just fine.

I second this!

Thank you so much everyone! This has been very useful!

The plan going forward is that I'm going to wait until I'm 18 instead of taking control now, as the paperwork seems like a bit of a faff and it's only 2/3 months until my birthday. I'm going to consider putting down a deposit (obviously depending on if my mum's guess was right) on a house late next year, if I find one that seems acceptable and I can figure out all of the legal side of mortgages and joint ownership - which I admittedly know very little, and you may see me on another thread in the future I think that seems preferable for me as it gives me a bit more security for things further down the line e.g. potential kids, but I'll make sure not to buy a house in my husband's name nor put the money directly in his account for security reasons.

If it's closer to £20k I may chip off some savings just in case anything bad happens, and if it's £10k then I'll probably put all the money down but we'll start putting our current savings into my personal account. If it's closer to £20, I'll get a chippy

Thank you so much for your help though everyone, and you've been very supportive and useful! x

OP, sounds like a plan. All the best with it. You have got your head screwed on. Come back to us mn 'vipers' if you need further advice down the road.

Hahaha thank you so much @blueshoes, I'll see you on some other threads (though probably by a different name!) Have a good day x

I've just checked my 16 year old son's CTF and the balance is just over £26K. We've been paying £100/mth into it since it was first opened with the original £250 I think. This was the max at the time but that has since increased to £300/mth I think.

It is with the HSBC and he can see the balance now online in addition to the other savings account balance we opened for him (that I still have control of), as he also has a current account with them. If you are sure it is with the HSBC then this might be an option?

Looks like the max you can invest now is more than I said but to be clear we never increased from £100/mth.

I just want to add , OP, you asked who could certify a copy of your passport. I believe (and Google confirms) the Post Office now offer a document certification service - it costs but could be convenient.

I have paid £75 a month into my son's since birth and it's worth around £18-20K now, sadly a bit less than it would have been due to covid.