Many lenders now require that their first-time buyers are able to put down a large deposit before they issue them a home loan. As a result, many people are forced to turn to their family in order to get enough money to make the deposit. However, the good news for the people that have to turn in this direction is that there are now many different types of mortgages designed just for those who need help from their grandparents or parents.
First up, for parents that want to just help out a child by offering them the deposit straight up the best option is to think about remortgaging your home so that you can release some equity from it. This will mean that you will have to arrange a new mortgage with your bank or possibly with a new bank, but it would help to let the loan be less noticeable in your monthly budget. Most of the time you will just absorb the borrowing costs with a slightly higher repayment rate.
Another way to help a child with their deposit is by offering to stand as a mortgage guarantor. A mortgage guarantor allows parents to put their home or good name against their child’s mortgage, in other words guaranteeing that their child will make their payments.
Some guarantor deals also allow a relative or parent to place a portion of the deposit down on a home as well. The deal allows your child to make all of the payments on their own, but if they miss one you have guaranteed to cover the loss so that the lender does not have to worry about anyone defaulting on the home.