Another way of using your saving to help younger members of your family get on the property ladder is through a "family offset" mortgage. These deals allow you to retain ownership of the money that you put up for a deposit. "The advantage is that the savings remain in the name of the parents and can revert to them at a later date. But parents give up any return on the cash in favour of helping the child," said David Hollingworth of London & Country Mortgages.
IFA’s at Enable of Bishops Stortford could more fully explain this kind of deal, where you put your cash into a linked savings account and the money acts as a deposit and will lower the monthly mortgage repayment, as interest is charged only on the balance remaining. For example, Yorkshire and Market Harborough building societies allow the parent to deposit cash that reduces the interest charged on the child's mortgage. Marsden Building Society offers a slightly different approach, enabling the buyer to borrow 100pc of the purchase price, subject to 20pc being deposited in the linked account. A charge is placed over that cash.
Some offset deals allow borrowers to set up more than one linked account, so both parents can contribute but don't need to pool their money formally. However, you must be prepared to lock up your money for years; you will not be able to get your hands on it until the mortgage is worth 75pc of the property value.
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