Bank of Mum...

[Itsrainingatlast]

I appreciate that I am in a fortunate financial position in posting this.
I own my house mortgage free.
My eldest son is in his 2nd year at Uni. He has about £30k in his junior trust fund (I put in £100 every month until he was 18), and about another £10k that he has saved (he also works and is very much a saver). He lives at home as he attends a local Uni and the student life is not really for him.
I am contemplating helping him to buy a flat. I would act as guarantor and would pay the mortgage and rent the flat out for the next two years until he graduates (he's doing a 4 year degree but I think might do PG study as well), and is able to cover the mortgage himself, although the flat would be entirely in his name.
Is this a ridiculous idea, or an effective way of getting my son onto the property ladder? My younger son is 4 years younger, and I would hopefully be in a position to do the same for him when he is a similar age.

Thank you @SandStormNorm very helpful

This is not always true. JBSP mortgages exist for exactly this situation - also known as ‘family backed mortgages’.

Can you combine a JBSP with a buy to let mortgage, though?

No

I think that’s very good advice.

My dad helped me out to buy a house when I was 23. Financially it was a very good move but it tied me to an area and a life that I didn’t really want at a very young age.

I wouldn’t be a guarantor. If you want to help him I’d simply give a cash gift to him. It’s more simple with less chance of spoiling the relationship if payments aren’t made or circumstances change.

Let him grow on his own.

He sounds like he is very grounded and not frivelous with his money. It's a good idea to get a flat or house in his name and rent out until he wants to live their. Make sure it is EPC C or you won't be able to rent it out.

SandStormNorm's post is very sensible.

Having read of so many problems with amateur landlords not following the more and more complicated rules properly, or having to cope with bad tenants, the last thing I'd want is a flat to rent out.

It isn’t the “bank of mum” though?

It is well and truly his money in his name

Absolutely not when you are planning to buy to let!!

Wait until both DC are ready to buy property and then give them the same lump sum each.

I know it’s coming from a good place and you mean well OP, but he seems like he’s doing pretty well on his own already and by doing this you might be preventing him from having the satisfaction of actually achieving it by himself. I think we get great satisfaction and take much more pride from things we’ve strived and worked hard for, having things handed on a plate is not always the greatest gift.

that is by far the best idea

• neither you nor DS have any idea of what is involved in being a landlord. You have not done any training or become a member of an association that will keep you up to date with legalisation ( eg National Residential Landlords Association)

• DS would lose all first time buyer incentives when he needs a place of his own in a place of his choosing

• DS would not live there himself so his property investment would incur Capital Gains tax when he sells - at a time when significant increase in the rate of CGT is a reasonable speculation

• DS would need to do a tax return each year to declare his rental profits, Does he know how to prepare a tax return?

You seem to regard the £30k in his trust fund as your money to decide what to do with op.

it is his money. You can advise. But that’s the extent of it.

unless you are saying that you’d want to invest money over and above the trust fund?

Either way, on the basis of this thread op - i think the money should stay safely where it is for the time being!