To help daughter with a mortgage

[WTDAC]

My adult (25) daughter lives with us (mum and dad) and saves £1000 a month by doing so.
She wants to move out to live with her boyfriend (super steady, been together for years, he is lovely, he earns well).
London rent would be approx £1500 a month between them.
If I gave them the money for a deposit (£50k, from an inheritance) they could buy instead and put the £1500 'rent' into a mortgage.
This to me seems a no brainer, but am I missing something?

Not necessarily. A conveyancer could protect that money for the daughter as they write up the paperwork for the purchase.

Yes but ensure you get a Deed of Trust

Not if they do a deed of trust and buy as tenants in common.

Are the figures reasonable is more of a concern. Is a 50k deposit enough? What and where could they buy? Would she be able to buy him out if they split?

Brilliant idea. It's what we're currently doing with our son. He's been paying a whopping £1k per month rent for a tiny one bed flat and it makes no sense to continue paying someone else's mortgage when he could be paying his own. We're matching him 50:50 with whatever deposit he manages to save and using our funds to double it up. He's got about £25k so far, and so we'll be topping it up to around £50k. Stupid us having money in the bank which we'll probably never use and then him inheriting it in 20 years' time after he's struggled in a cramped flat paying someone else's mortgage. Today's youngsters need help now, not having to wait until parents die.

Yes but get legal advice so your money is protected even in the event of a split

If I can do this for my kids when they are older then it's a no brainer really.

Absolutely lovely thing to do and I'm sure it will be very much appreciated.

I’d suggest that you ringfence the deposit. I’d present this as a common sense thing rather than anything else. So your daughter would get that back first and then half the equity. Do you know the boyfriends family well? They might stump up some cash / equal amount.

Most BTL mortgages have a clause restricting you from renting to family members.

If you can afford it I'd do it. But get legal advice first. And consider not having the property in joint name with the boyfriend, as it sounds as if he's not going to contribute to the deposit. The property could be in your daughter's name and he could pay a sensible rent, rather than half of the mortgage and utilities.

That's really nice of you to think of them, my BIL got his girlfriend pregnant at 17 so the in-laws bought them a house. They broke up a few years later so he sold the house and kept all the money. The other kids got nothing (but at least weren't teenage parents I guess).

Even if they did die within 7 years the £50k isn't physically given back just accounted for in the estate for probate purposes. Any IHT that may be due is paid by the estate. If its only one of the parents that die chances are there is no IHT anyway. If both parents die and IHT is due chances are the estate can foot it anyway.

If you do gift it make sure it's a true gift and you aren't going to want it back! And don't attach conditions - eg DD wants to buy a new build in the city 300 miles away from you and you want her to buy a cottage in the village you live in.

There's been a couple of posts recently where the recipient has been asked to repay the 'gift'. Which seems to be a total misunderstanding of a gift.

As it's a gift it would need to be taken into account for inheritance tax purposes (up to 7 years I think).

I'd gift it to her. In London prices are so high that if they split she may struggle to get back on the ladder. I'd get a solicitor to draw up an agreement so that she gets the deposit plus interest etc back in the event of a split

Lovely in theory but what is the whole picture? How much does she earn and actually save?

There is a difference between earning £2k a month and saving £1k and earning £1400 a month and not spending £1k on rent.

She might like spending her 1k on other stuff, she might not want to move out when she realises it's a bit shit no longer saving £££ every month and earmarking some for a nice holiday.

It's a lovely gesture but once she's moved out, that's basically it, her money is commited to a mortgage, life and probably kids for the next 20 years.

She might prefer living at home and enjoying the opportunity to save a big nest egg whilst still dipping into it.

Basically unless you want her to move out and want to know if this is a fair way to do it, I'd sit back amd be guided by her.

You will get many people recommending a deed of trust for your daughter in order to protect her and her share in case of a split. Many of those people will have had little experience of the practicalities of these when things go wrong.

Yes it will set out financially what your daughter is entitled to, but in my experience it caused an absolute nightmare.

You are still dependant on the other person to sell. They can hold out for whatever offer they like (unless you get a court order). In my case, my ex was financially much better off staying in the home we owned together. And so he scuppered sale after sale in order to keep me subsidising his living costs. Yes my money was protected, but physically I was trapped.

After being so brutally burned I would never tie money up with someone I am not prepared to marry. Buying somewhere together is not a baby step towards marriage in my opinion.

Most people recommending a deed of trust have no idea of the realities of what actually happens when things go wrong.

As long as the deposit is ring fenced, yes, it’s very sensible. I hope we can do this for dc when they are a similar age. It would have made a massive difference to me if my mum had been able to do the same. I’d probably be mortgage free by now.

If I could afford it, I’d do it, no question. Dh and I have helped both dds to buy.

I'd do it, but I'd try to protect the £50k somehow, in case of a split. Not sure how you do it, but there must be ways.

Nice to see a parent who actually wants to help their child for a change

A change from what @MummaMummaMumma ? It's really common for parents who can afford it to allow their adult children to live at home to save for house deposits or to give them money towards a deposit - it's pretty much the norm in fact.

Can they afford to borrow enough for a place in London (plus pay the mortgage, bills and silly service charges on top)? If they can then yes, it's better to buy.

Let them rent together first for a year or two

Then come with their plans for location etc

Bearing in mind mortgage payment is only one cost of owning there is maintenance etc as well

No that is not the case if legalities are taken care of .

Your're lovely and I intend to help my daughter get a house and a mortgage when the time comes. Just look at the other thread on here at the moment (renting in your forties/fifties) to show how hard it is now to get on the property ladder. Get some proper financial advice though to: - ensure it is a gift, that you wont be clobbered later, that the deposit is protected, which may mean the house is solely in her name. If they later get married it will be far harder to prove but corss that bridge.

My mum and dad did. Granted it was 15 years ago and £6k. We didn't protect the deposit as wanted to be joint tenants with survivorship rights. Worked out fine - we are in a bigger house now, nearly paid off with £180k equity.

Would you want it back?

If you do she would need to ring fence it to ensure he doesn't get half if they split.