Are you looking to buy your first home with help from family members? Put your questions to the Santander experts. £200 voucher to be won

[LibbyMumsnet]

This Q&A is now complete - there will be no further answers posted.

With sky high house prices, student loans and rising rent costs, getting on the property ladder is challenging. Santander’s first time buyer research (undertaken in 2021) shows that over a third of first time buyers are hoping to buy their first home with help from family and friends in the next 5 years. If this is you, and you have a question about preparing to buy your first home, you’re in the right place.

The experts:
Graham Sellar, Head of Mortgage Development, Santander - Graham has more than 30 years of experience working in financial services, and has been a mortgage specialist at Santander since 1996. He is regularly quoted as an expert voice in the media on all things mortgage related.

Hayley Burton, Financial Planning, Santander - Hayley has 25 years of experience in retail banking and 6 years’ experience in the wealth area, where she leads teams across the UK who provide expert, trusted investment and protection advice to customers based on their individual needs and to achieve their financial goals. Hayley is also a Mum and Step Mum to three children aged between 11-16, and so she’s regularly thinking of ways to help her children financially in the future.

Linda Murray, Regional Manager, Santander - Linda has worked in banking for 35 years across a broad spectrum of areas including mortgages, risk and most recently face to face banking in Santander branches. At work, she’s particularly passionate about supporting customers to help them make informed choices about their banking. Linda is also a single mum to her 24 year old daughter, Charlotte. She’s looking to support Charlotte financially and emotionally when she buys her first home.

Do you have questions around saving for a deposit? Perhaps you’d like to know more about how your family could help? Or maybe you’re interested in knowing what to expect when buying a home. The experts will be back between 26 July and 6 August to answer some of the questions you have on preparing to buy your first home.

All who post a question (regardless of whether it is answered or not) will be entered into a prize draw where one MNer will win a £200 voucher for the store of their choice (from a list).

Thanks and good luck!

MNHQ

Insight Terms and Conditions apply

@Pemba

It says in the OP that the experts will be there to answer between 26 July to some time in August. So from Monday

Some pps score really low on reading comprehension.

And some people score really highly on being a snarky know-it-all 😁

Posters that can't bothered to RTFT are all over the place. Rushing to the end to post their words of wisdom. It's tiresome.

But I don't think I mentioned you by name actually, no need to get aggressive

@Pemba

But I don't think I mentioned you by name actually, no need to get aggressive

My reply wasn’t the least bit aggressive. Do you struggle with reading comprehension too? 💁🏻‍♀️

Hello - Graham, Hayley and Linda here! We're really pleased to be answering your questions this week. Preparing to buy your first home with help from family can be overwhelming, but we've got lots of tips to help get you started on your journey.

@BristolMum96

What do lenders think of parents helping with the deposit in the form of a long term repayable loan to the 'child'?

@BristolMum96 At Santander we consider applications where the source of deposit is a loan. At application we’ll need some additional information about the terms of the loan, and the loan repayments will be taken into consideration as part of the mortgage affordability assessment.

For more information visit Step-up: Helping family to buy > How might helping affect you?

Graham

@Vroomed

Will those who help with the deposit also be considered owners?

@Vroomed At Santander, we’d want to see details of the person gifting the deposit, including:

• the relationship to the applicant,
• confirmation that the funds are not repayable, and
• that the person gifting the deposit will waive any right to hold any equity or legal interest in the home being purchased.

For more information visit Step-up: Helping family to buy > How might helping affect you?

Graham

@BackforGood

Do the mortgage lenders mind where the gifted deposit comes from? Friends said that a mortgage company her friend applied to wouldn't "accept" the deposit as it came from one of their parents.

Are there are tax implications, and if so at what point do they kick in and is it possible to backdate the gift so it covers say 3 years of allowed giving?

@BackforGood At Santander, gifted deposits from family members, including parents and grandparents are accepted. You can use some or all of it towards your deposit.

It’s important to know whether there are any inheritance tax implications in gifting money. Talk to an independent tax adviser or HMRC directly for the full picture.

Graham

@BatsInTheCellar

Hi there. Our daughter is looking to buy in London in the next couple of years. She's looking at a help to buy equity loan and a mortgage. Salary is circa £80k. We can lend her something towards her deposit.

What are these pitfalls with that scheme and would it be best for us to lend her more and for her to borrow less equity through the scheme?

@BatsInTheCellar

The current Help to Buy: equity loan scheme was launched in April and runs until March 2023. The scheme is now for first time buyers only, so your daughter would qualify if she hasn’t owned a property before. You combine a mortgage and an equity loan from the Government to buy a brand-new home in England. Your daughter can put in a minimum of 5% deposit and the Government provides an equity loan of up to 40% if she wants to buy a home in a London borough (London Help to Buy).

When deciding if an equity loan is right for your daughter, it’s important to consider the full cost of borrowing:

• the equity loan is interest-free for the first 5 years
• there’s a £1 monthly management fee payable.
• interest is charged on the equity loan amount from year 6 at a rate of 1.75%
• this interest rate will rise every April by the Consumer Price Index (CPI), plus 2%
• interest is payable until the equity loan is repaid in full
• the amount you have to repay can increase if the property value increases.

You can find out more information about the scheme on the Government Help to Buy page.

To work out the best option for your daughter, I’d suggest that you speak to an independent financial adviser, which you can find at www.unbiased.co.uk

Graham

@MarsBarRover

Do first time buyers have to pay stamp duty at the moment?

@MarsBarRover

First time buyers buying their first home in England or Northern Ireland for £300,000 or less will pay no Stamp Duty Land Tax (SDLT). Where the purchase price is between £301,000 and £500,000, they will pay 5% SDLT on the amount above £300,000. You can find out more information and see the current rates on the Government’s website.

If you’re buying in Scotland there’s a Land and Buildings Transaction Tax, and if you’re buying in Wales there’s a Land Transaction Tax.

Graham

@mayflower21

Can someone on work visa (family) buy a house with me?

@mayflower21 Any applicant who is a non-UK citizen must be able to prove their permanent right to reside in the UK either by settled status, pre-settled status or Indefinite Leave to Remain.

Graham

@Shehasadiamondinthesky

My son and daughter in law are buying a house with me as they cannot get on the property ladder. I'm contributing £250,000 and living in the attached annexe and they will be getting out a mortgage of £100,000. Will they get a first time buyers discount on their part? Is there anything else I should look out for?

@Shehasadiamondinthesky

At Santander, if you’re going to be living in the property and will also be providing a lump sum towards the purchase, then you must be included on the application and be named on the mortgage and the deeds. This won’t then meet our definition of a first time buyer if you’ve previously owned a property even though your son and daughter-in-law haven’t.

You’ll also need to consider Stamp Duty Land Tax (SDLT). If you buy a property between 1 July 2021 and 30 September 2021, you’ll only start to pay SDLT on the amount you pay for the property above £250,000. There’s also a concession for first time buyers. They’ll pay no SDLT if they’re buying their first home for £300,000 or less. Where the purchase price is between £301,000 and £500,000 they’ll pay 5% Stamp Duty on the amount above £300,000. This option may not be applicable to you however if you’re named on the mortgage as it’s only available to individuals who have never owned an interest in a residential property.

You can find out more information and see the current rates on the Government’s website.

If you’re buying in Scotland there’s a Land and Buildings Transaction Tax, and if you’re buying in Wales there’s a Land Transaction Tax.

Graham

@sunshinemum83

We are first time buyers and are planning to buy house next year, our Experian credit score is 999 out of 999 but our credit affordability is still bad. What is more important to lenders: the credit score or the credit affordability? We don't spend much on credit cards, always repay in full and don't go overdraft, what else could we do to improve our credit affordability score?

@sunshinemum83

Most banks use a credit score rating to help decide whether they can lend you money. This shows how likely you are to be accepted for credit, the higher the score the more likely you are to be accepted for a credit application.

Your credit score is based on your credit report, which is created using information such as:

• information from the electoral register
• details of any court judgments or bankruptcies in your name
• a record of current and past credit commitments (for example, credit cards, loans, mortgages) that you’ve held in the last six years
• details of any searches on your credit file.

We'll also make credit checks with credit reference agencies to find out how you've managed credit before.

Affordability is a separate calculation and is not linked to your credit score but your income, expenditure and credit commitments. You can find a host of calculators on our website to understand how much you/your family are likely to be able to borrow based on your personal circumstances.

For tips on how to boost your credit score visit our website.

Graham

@Mooncakex

What happens if two people are getting a mortgage together, one with excellent credit and the other poor (CCJ?)

What would you advise?

@Mooncakex

The credit history of both applicants will be taken into account as part of the mortgage affordability assessment. Our decision will be affected if information received from a credit reference agency shows arrears, County Court Judgments, or other credit defaults.

You can check your credit score to see how likely you are to be accepted for a credit application. If you find your score is lower than expected, you can check your credit report and see if there’s anything you can do to improve it. Common websites that are used to check credit scores are Equifax and Experian. They may charge you for this service.

For tips on how to boost your credit score visit our website.

Graham

@ohdannyboy

I would like to pay my parents back for lending my deposit - can I draw my own contract up, or would you recommend a solicitor drawing one up - bearing in mind the cost.

@ohdannyboy

It's helpful to draw up a loan agreement. Everything is down on paper and so everyone knows where they stand. Deciding to draw it up yourself or having it done more formally with the help of a solicitor depends on your own family situation. A loan agreement would cover things like repayment amounts, the repayment schedule and any interest to be paid. For more things to think about take a look at Step-up: Helping family to buy > How might helping affect you?

Hayley

@OhNoNoNoNoNo

Question 1 We are giving our 4 kids a decent amount of money to buy houses. When they buy with partners who don't have any savings and don't have any parental help how should we respond if our kids ask us for advice over how to protect their money. We give the money to them with no conditions whatsoever but secretly I would like them to protect the money from any future relationship breakdowns.

@OhNoNoNoNoNo

If your children are buying a home with a friend or partner you should confirm if the money is for them and the other person and whether the mortgage will be in single or joint names.

You may want to think about what will happen if they decide to go their separate ways. You may also want to speak to a solicitor about arranging a ‘Deed of Trust’ - an agreement showing how any equity in the property should be split between the interested parties. You can expect to pay around a few hundred pounds for the solicitor’s time, but it may save more in the long term. The rules may differ in Scotland.

Hayley

Thanks for all your questions so far! We'll be back next week to answer some more.

Hi everyone - Graham, Hayley and Linda here! We're back to answer some more of your questions.

@pushchairprincess

Given our retirement ages are around 67 now - can we extend the repayment terms to 30 years plus - to enable the initial payments to me less (with a target to overpay once we are in a better financial position)

@pushchairprincess

Most lenders have a maximum age limit for mortgage lending (normally 65 to 70). At Santander we’ll consider lending up to a maximum age of 75, over a maximum term of 40 years if you have a repayment (capital and interest) mortgage. If any part of the mortgage is on interest only – i.e. the monthly payments only pay the interest owed, and the capital is repaid at the end of the agreed mortgage term – then the maximum age is 70 and the maximum term is 25 years. In both cases we do not lend beyond an applicant’s intended retirement age.

You can apply to your mortgage lender to extend or reduce your existing mortgage term at any time. They may carry out affordability checks as part of the application. You can also make regular or one-off overpayments on your mortgage to reduce the monthly payments or pay the mortgage off sooner. For example, at Santander on a tracker rate mortgage you could make unlimited overpayments. On a fixed rate mortgage, you could overpay up to 10% of the outstanding mortgage balance in a calendar year without paying an early repayment charge.

Graham

@Marmitemarinaded

Better to buy life assurance at same time as mortgage with the provider or independently?

Thanks

@Marmitemarinaded

It's important to make sure you have adequate protection in place but it’s up to you whether you choose to take this with your mortgage provider or go elsewhere. If you apply for a mortgage directly with Santander, we’ll discuss your options with you as part of your mortgage application. You can also seek independent advice at www.unbiased.co.uk

Graham

@MotherofPiggies

We are hoping to down size and release some money from our house to gift to each of our children for a deposit when the time comes.

What are the tax implications and can the money we gift them be ring fenced in case of relationship break downs with partners?

@MotherofPiggies

If your children are buying a home with a friend or partner you should confirm if the money is for them and the other person and whether the mortgage will be in single or joint names.

You may want to think about what will happen if they decide to go their separate ways. You may also want to speak to a solicitor about arranging a ‘Deed of Trust’ - an agreement showing how any equity in the property should be split between the interested parties. You can expect to pay around a few hundred pounds for the solicitor’s time, but it may save more in the long term. The rules may differ in Scotland.

There are some tax rules around how much you can gift to another person. The Government website details these rules. There are also some tax rules around selling your home. These are also detailed on the Government website. You may want to talk to a tax advisor to discuss your own situation. You can find a tax advisor at www.unbiased.co.uk

Hayley

@MarryBanilow

Is there a tax effective way of helping our kids save for a deposit?

@MarryBanilow

If your children are still a few years away from buying their own homes, you’ve still got time to open a cash ISA in your name and pay into it regularly or subscribe to an existing cash ISA that you hold up to the annual ISA limit. Or you could look at a stocks and shares ISA if you’re looking to save for at least five years. You can only pay into one of each type of ISA each tax year. Any money paid into an ISA must belong to the account owner. Taking advantage of tax-efficient saving over several years should get you into a good position to help. However, there are some tax rules around how much you can gift to another person. The Government website details these rules, but you may want to talk to a tax advisor to discuss your own situation. You can find a tax advisor at www.unbiased.co.uk. Tax rules are subject to change.

If you're considering investments as your children are more than 5 years away from buying their first home, you can take a look at our Savings and Investments calculator to see how you could grow your money over this time.

And if your children are under 18, you may wish to open a Junior ISA for them and pay into it regularly up to the annual Junior ISA limit.

For more information take a look at Step-up: Helping family to buy > Family lending a hand

Hayley

@littlecottonbud

My grandad would lend me the deposit for to get onto the property ladder but said he wants to be also on the mortgage to he can keep tabs of the repayments, he is 62 and still in full time work ? this would mean I can get a property, he can protect his investment and can take his name off when I have paid the deposit back - is this workable ?

@littlecottonbud

If you take out a joint mortgage with your grandad you’d be equally and legally responsible for the mortgage repayments and he’d be named on the property deeds. If he still has a mortgage on his own home, he’d need to make sure that a lender would be comfortable that he could afford to pay for two mortgages.

Your grandad’s credit worthiness will be taken into account during the mortgage application, which means you could be able to afford a more expensive property. It also means his credit file will be linked to yours, so if either of you experiences a negative effect on your credit file it will impact the other too.

Also, as he is technically buying a second home additional stamp duty would be payable on the purchase. There may also be capital gains tax implications when the property is sold. If this is something you’re both interested in then you may find it useful to speak to an independent tax adviser at www.unbiased.co.uk or HMRC directly.

As an alternative option your grandad could loan you the deposit without being named on the mortgage. The mortgage lender would just need some additional information about the terms of the loan on the application, and the loan repayments will be taken into consideration as part of the mortgage affordability assessment. To make sure your grandad protects his investment, you may find it useful to get a loan agreement. Everything is down on paper and so you both know where you stand. Deciding to draw it up yourself or having it done more formally with the help of a solicitor depends on your own family situation. A loan agreement would cover things like repayment amounts, the repayment schedule, and any interest to be paid.

If you’re interested in finding out more about the options available to you then take a look at Step up: Helping family to buy>How might helping affect you

Graham

@ButterflyOfFreedom

What are the mortgage borrowing terms at the moment? When we bought we did it over 30 years- is there a minimum & maximum term? Thanks.

@ButterflyOfFreedom

Most lenders offer mortgages with a maximum term of between 25 years and 40 years. At Santander you can spread the cost of your mortgage over a minimum of 5 years to a maximum of 40 years for repayment (capital and interest) mortgages (subject to individual circumstances and lending criteria). If any part of the mortgage is on interest only – i.e. the monthly payments only pay the interest owed. The ‘capital’ still needs to be repaid (the amount borrowed) at the end of the mortgage term – then the maximum term you could take a mortgage over is 25 years.

Graham

@Suzi888

Hello all Is a fixed rate or adjustable mortgage rate better and why? Many thanks.

@Suzi888

Depending on your circumstances there’s pros and cons to each product. Why don’t you take a look at our What types of mortgage are there? page for more information. It explains the different types of mortgages and lists the pros and cons for each to help you work out which one is best for you.

Graham