Helping adult children onto the mortgage ladder

[Su52]

I don't know if this has been asked before so I apologize in advance if it has... cutting a long story short: due to certain circumstances, I am the sole owner of x2 houses ( no mortgage).
As my dd1 and her partner were expecting when I took ownership of them, I allowed them to live in one of them.
However, I would like to help them onto the mortgage ladder now that they're older and more independent. Does anybody on here know if there's a way that I can help them/just my dd1 by allowing them to maybe take a mortgage out on the house they're living in?
(They don't earn enough to be accepted by a bank in the usual way).

I have heard of parents giving their children a mortgage, Su.

Maybe this will help you.

Good for you, I hope it is possible. Young people have such problems getting on the housing ladder nowadays and it's great when they get a break.

If they don’t have the finances to get a mortgage, then your only option is to gift them the house.
You say this is DD1. Are you able to do the same for dd2 or other children you have?

Thankyou..I'd love to help them out even if it's with the deposit.
No I have two other adult children which in a way, is another reason why I'd like to sort my "estate" out now because I want to split my will 3 ways and don't want them having to move out in order to sell ( I'd like to think that my other two wouldn't do that as they adore their niece and nephew but it could make things awkward).
As far as giving them the house, I don't want to do that just yet incase I ever need the money from it myself if that makes any sense at all...?

Why not just let them continue to live there rent free for the next number of years so they can save a deposit and/or increase their earnings so they would qualify for a mortgage at a later point? It would be their home and they wouldn’t face the prospect of losing it due to a landlord wanting to sell etc

Sell them the house and then lend them the money to buy it? Gift them a deposit?

May be Capital Gains Tax for you and Stamp Duty for them

Legal advice needed!

I would let them live rent free for a certain amount of time while they save. 3 years or so. They could put away £1000 a month between them and have a really decent deposit.

@Plumtree391

I have heard of parents giving their children a mortgage, Su.

Maybe this will help you.

Good for you, I hope it is possible. Young people have such problems getting on the housing ladder nowadays and it's great when they get a break.

When I posted the above I thought I also posted a link! Obviously it didn't happen so am doing so now. I don't think it is the one I originally looked at but there are loads of articles on the internet about this subject:

www.forbes.com/sites/whittiertrust/2018/10/05/a-smarter-gift--why-giving-your-child-a-mortgage-may-be-better-than-giving-them-a-house/?sh=12cbd0775965

Thankyou everyone for your advice.
I don't know how it'll work but I might take this to a solicitor/advisory service to see the legal implications.
Just wish I was more clued up on this sort of thing. So scared of doing the wrong thing/breaking the law.

You're a smashing mum, Su. Good luck.

You could charge rent as usual, but you save it and then gift them it on a couple of years.

Or you could simply gift a deposit so they can buy elsewhere - will need to be hefty if their earnings are v low.

You say you need to hold onto house in case you need some of its value later.....be careful because of this. I’m your desire to help your kids, don’t leVe yourself short or vulnerable.

It could be that you continue with the current situation which gives you flexibility if you need to change it. Possibly, your kids will have to wait until you die for home ownership of their incomes mean they cannot afford any kind of mortgage.

Your help is wonderful ....but are they becoming fully reliant on it and losing any incentive to boost their own incomes? Might not be case, but overly generous parental help isn’t always a benefit on longer term.

Save their rent and gift them a deposit.
Let them buy the house with money from rent offsetting purchase price.
Pay for higher qualifications so that one or other can earn more and start saving themselves.

I think you have to be really pragmatic and not put yourself into a stretch position to help them. Only offer what you can afford with consideration of your future needs.

You can’t ‘allow them to take a mortgage out’ on the house without selling them part of the house. If you want to keep it in your ownership, then that’s a non-starter.

Do they pay rent? If not, why not? If they don’t earn enough to get a mortgage, then home ownership isn’t likely to be a good idea anyway - maintenance etc needs to be considered.

They need to be saving a deposit up, taking advantage of your already generous housing situation.

Also, think about what you’re saying - you don’t want to officially sell this property to them in case you need it in the future (fine) but you are worried if you died their siblings would make them homeless as they’d need to sell. If you needed the money in the future the only ways to get it out of the house would be to sell -making them homeless - or to take out a mortgage/secured loan/equity release - which would make them homeless after you died anyway.

Much the best thing is to either sell to them, or just be clear about timescales and what might happen in the future so they get prepared.

You need legal advice.

My own ( non legal ) advice is to treat all your kids equally and assume the worst about the future ie that they will get divorced , that they will all fall out with each other, that true ex will take them to the cleaners.

Make plans with this in mind.

Do not I repeat NOT assume that those who are now single or childless will be happy for their married / with children siblings to get more because they are somehow more worthy or deserving. Treat them all the same.

What are the timescales and formal agreements re current arrangement? Do they understand they might not have this free rent place forever and you might need to sell in future to find yourself?

Ensure everything about the current arrangement is clear in your own head and communicated and in writing. Horrible family fallouts through misunderstandings can happen otherwise.

Again, think about them long term too. The best thing is to help them be self supporting.

You sound like you’d like to gift the whole house, but I’m terms of long term personal needs can’t do that. But gifting a deposit if they can’t afford any mortgage won’t help....and that income level suggests home ownership with its ongoing costs isn’t viable for them.

I guess you’re worried about longer term ....if you need to sell or the property has to be sold to fund an inheritance split, they will have to move out. But that’s just the reality and you can’t afford to give them a whole house to prevent that unless you jeopardise you’re own future or make the inheritance unfair with siblings.

You are providing a massive help now. Do they have special circumstances which mean they will never be able to be self supporting? If not, helping them support themselves is as important as honing financial help.

Thankyou everybody! You've certainly given me some "food for thought"!
I do need to look into things in more depth.