Almost every person out there needs to buy a property at some point in their life. If you have children, you’re probably aware of the fact they’re going to do so as soon as they start thinking about starting a family.
And it’s perfectly natural that you want to help your little one climb onto the property ladder. However, there are three questions you might want to ask yourself before you do so.
Can I afford to help them?
Ideally, every parent should be able to help their children get onto the property ladder in no time. However, there’s no point in doing so if it’s going to create you a debt you simply can’t pay off. Therefore, one of the first questions you need to ask yourself when helping your children choose their first property is – can you afford to help them? It’s quite often that parents decide to help their children get the property, without even thinking about whether it’s going to cause them hardship. While this may make you satisfied in a way, it’s not going to do neither you nor your children any good. Only once you’re 100% sure you’re able to contribute should you set money aside and use it to help your little ones get onto the property ladder. If you’re not sure whether you can help or not, turning to your accountant may be a good idea.
How do I fund it?
Ideally, every parent has managed to stash away enough money to help their children when it’s time for them to leave the nest. In reality, this doesn’t always seem to be the case and some parents need to come up with ways to fund the idea of helping their children get onto the property ladder. That said, it’s worth mentioning that there are more than a few ways you can fund it. Firstly, you can think about going for a secured loan against your house. This isn’t necessarily the best idea but it can help you get all the money your children need. Besides this, you can also consider retirement living. This allows you to sell your home and use the money you get to buy your children their properties. Do this and you’ll ensure your children are able to buy their properties while you get all the care and security you need. If you have some extra property, you can rent it and make sure you have something to leave to your children as inheritance.
Should I give them money or lend it?
Another question you need to ask yourself when it’s time for your children to buy property is whether you should give them the money or loan it. Most of the parents out there choose to give their children money for buying a property without any expectation of it being returned. This again, may not always be a good idea since it leaves you with way less money than you managed to scrape away. So, if you decide to come up with a deal for them to pay off the loan, it’s recommended that you draw up a contract specifying how they’re going to pay you back. Just bear in mind that it’s a good idea for your children to declare the loan to their mortgage lender. This is a better solution than having your children take a loan from the bank or a private lender, since you can always agree to adjust the contract so that everyone has enough cash on hand.
Even though it can be pretty tough to watch your children struggle to buy their first property, it’s very important that you first make sure you can actually help them. Once you do this, you can start thinking about how much money will you give them and how you’re going to live after helping them get on the property ladder.