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Look beyond Help to Buy says Which?

Many people are continuing to experience difficulty in obtaining finance in order to purchase a house, and as a result consumer organisation Which? has been encouraging consumers to look at all of the options available to them.

While the Help to Buy scheme has been hitting the headlines, Which? research found that specialist mortgages aimed at parents helping their children to buy their first home such as guarantor mortgages and family deposit mortgages are alternatives worth considering.

More than 1,200 Which? members were polled and a quarter had helped their children onto the property ladder, while 7% intend to in the near future. Of those who assisted their offspring, two-thirds had given their children money to use as a deposit, while one in five lent them the money. Another one in ten stood as guarantor for the mortgage and 4% took out a joint mortgage.

Gifting or lending the deposit amount may be the most straightforward option available to those wanting to help their offspring on to the property ladder, but not all parents have the cash to spare.

Other options are available, according to Which? and include:

  • Various types of guarantor mortgages, some of which allow parents to put their own property up as security, allowing lenders to advance 95% loans where they would otherwise require a larger deposit; and
  • Family deposit mortgages which allow parents to offset their savings against their children’s deposit. This parental contribution is held as security in a deposit account with the lender, but still gathers interest and is returned if their children’s mortgage triggers certain events.

Which? has stressed that it is advisable to obtain independent financial advice before deciding which, if any, option you should take.

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