A parent’s obligation to their children does not stop with adulthood – and neither does the impulse to provide, either. Love for a child is one of the strongest bonds a person can experience, and it is only natural to want to do everything you can for your child because of that love. With difficult times ahead, future generations are facing unique struggles – not in the least when it comes to affording a home. What can you as a parent do to help them onto the property ladder?
Setting Up a Trust
One of the most common ways in which families seek to provide for their children’s future is through the setting up of trust funds for them. Trust funds are a uniquely useful form of long-term savings, in which money can be entrusted to the next generation of your family without the risk of losing value or being spent accidentally.
There are several ways in which a trust fund can be set up, some of which make provisions for contractual stipulations preventing the money from being spent in certain ways, or on certain things. This way, money can be squirrelled away to pay for your child’s first home without representing a major hit to finances. Other family members could also contribute to the fund.
Gifting a Property Outright
If you have the money up-front, you could provide your child with a house as a gift, by buying it directly and then transferring the deed over. However, there may be tax implications for the gifting of a home to your children – especially if some time has passed between the purchase of the home and its subsequent gifting. It is recommended that you seek specialist legal advice before you proceed, to prevent yourself or your children from liability for unexpected taxation.
Building a Home
Buying a property outright may seem like something of a risky investment, especially combined with the relative volatility of the market as it stands. Fears abound of a market crash of sorts, in which house values could be significantly affected by several factors – including the proposed increase in Bank of England interest rates.
Here, an interesting proposition arises. With the right budget and approach, building a home could well be cheaper than engaging with the property market in search of an existing property. The process is even simpler and easier if you already have land on which you can build a house – whether on your current home’s plot or land given by a family member. With no chain and no mortgage, your child can be guaranteed a starter home that suits them.
Financial Assistance
Of course, for the vast majority of families, the prospect of purchasing or building property for their child is, unfortunately, an unattainable one. Present economic crises have put immense pressure on household budgets as they stand, let alone the possibility of making major single investments in construction or existing property.
But present difficulties do not preclude you as a household from providing financial assistance to your children in the future. There are many ways in which you can make your child’s first property a reality. For one, you could directly subsidise their deposit and mortgage payments through the transfer of money.
You could also have them apply for a joint mortgage to that effect, subsidising the whole purchase of their home without surrendering a lump sum of money in the process.