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The most obvious option is to gift an amount of money, usually towards the deposit for a home.
Alternatively, you can take out a Joint Borrower Sole Proprietor arrangement, where your name is on the mortgage but NOT the property ownership deeds. The benefits include not having to gift cash, and as your name’s not on the deeds there’s no additional Stamp Duty to pay; your estate for inheritance tax (IHT) will also be reduced by the value of the mortgage.
Another option is to put a sum into a Secured Deposit Account that sits alongside the mortgage, giving your relative the benefit of an interest rate applicable to a lower Loan to Value mortgage. This is known as a Secured Deposit Account/Family Security Account.
If you have sufficient equity in your own property, it can be used against a certain amount of your younger relative’s mortgage, reducing the interest rate and the mortgage payment. Using Security through Property, your estate for IHT purposes would be reduced by the value of the charge on your home too.
Finally, you could look at a Family Offset Account. This allows family members to deposit funds into an account linked to mortgage, with your younger relative only paying interest on the net amount outstanding to reduce the interest rate and the mortgage payments. You also have access to your funds at any time.
Choosing the right option from so many can be difficult. So to find out more about which might be best for you, just contact any member of our mortgage team.
The property on which the mortgage is secured may be repossessed if you do not keep up repayments on your mortgage.
Franklyn Financial Management Ltd is an Appointed Representative of and represents only St. James’s Place Wealth Management plc (which is authorised and regulated by the Financial Conduct Authority) for the purpose of advising solely on the Group’s wealth management products and services, more details of which are set out on the Group’s website www.sjp.co.uk/about-st-james-place/our-business/our-products-and-services.
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