9 May 2017

Press Coverage

The Bank of Mum and Dad is the 10th biggest mortgage lender, according to a new report from insurer Legal and General. However, Mark Harris of SPF Private Clients, warned: ‘Money from parents must really be a gift rather than a loan as far as mortgage lenders are concerned, so that it doesn’t impact the borrower’s affordability. Getting the correct legal documentation in place is also crucial, particularly if one set of parents is providing support to a young couple. Parents will want to protect their deposit gift if the couple split up so that it is returned to the parents and not split between the two parties.’ BBC News, 2 May 2017

For those parents who are helping out children there are some steps you can take to protect your money. ‘Get a family lawyer to do up an agreement, which you both sign, that ring-fences the deposit,’ says Mark Harris of SPF Private Clients. A discretionary trust is another option: ‘These trusts are run so that a child only has access to the money at various times in their lives, such as 21, 25 or 30,’ adds Mr Harris. ‘It’s a good idea to appoint trustees who you trust to administer it.’ The Times, 6 May 2017

There are other options to handing over vast sums of cash if parents wish to help children onto the housing ladder. Mark Harris of SPF Private Clients, said: ‘Parents who wish to maintain control over their savings may consider alternatives to simply handing them over, such as the Barclays Family Springboard Mortgage or the Family Building Society Family Mortgage, where savings are offset against the mortgage as security but the parents get them back at a later date. This can also be useful for retirement funding, ensuring parents aren’t left penniless in their old age.’ Moneywise, 2 May 2017

A Times reader who had borrowed £125,000 from his parents to buy a home now wants to pay them back. Eve Morgan of SPF Private Clients, advised: ‘[He] will benefit from completing a budget planner to ascertain his surplus income and to identify an amount to put aside to repay his parents. Comparison sites such as Money Facts will allow him to find a high interest savings account in order to fully utilise the amount he is putting by.’ The Times, 6 May 2017

Yorkshire Building Society has launched a record-low discounted variable rate of 0.89 per cent. Mark Harris of SPF Private Clients, said: ‘If the election means people put decisions to buy on hold, then we could see even more competitive deals in an effort to attract more borrowers.’ The Times, 22 April 2017

Despite some record low rates, mortgage approvals have fallen for the second month in a row, according to the Bank of England. Mark Harris of SPF Private Clients, said: ‘With HSBC launching the cheapest five-year fix on the market at 1.69% and Yorkshire Building Society introducing a record low two-year discounted rate at 0.89%, the market is more competitive than ever. It is a good time for borrowers, with lenders keen to attract business from first-time buyers, home movers and those remortgaging. However, affordability criteria remains tight.’ BBC News, 4 May 2017

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