How to help your child on to the property ladder

property ladder

When people say your children grow up in the blink of the eye I thought they were exaggerating for effect.  But with my eldest just starting secondary school I have realised time does go fast.  I know it won’t be long before I need to help my boys get on the property ladder or assist them with the cost of their weddings.  Those major milestones are looming in the not too distant future and I am not ready for them.

We can’t do anything to stop time, but we can plan so our children have the necessary funds to buy a property when they leave home.  There is no time like the present to start thinking about the bigger milestones your children will face.  Otherwise your child might still be living at home with you when they are 37 (my brother being the case in point!).

Moneyfarm have partnered with consumer champion Which? to produce a mortgage adviser’s guide to helping your children on to the property ladder. This is the first installment in their ‘Once in a Lifetime’ investment advice series.

I think its such a useful resource, especially if you are unsure about the costs associated with buying a house.  Parents are finding it harder to financially support their children like they used too, as they are now feeling the pinch.  The cost of living seems to spiral every year!  Everything rises quicker than our wages sadly!

Despite those hard times the article mentioned parents are still handing out an average of £18,000.  That figure seems so high when I look at my empty bank account.  I guess I better start thinking about how I will be able to support my children when the time comes.

How much can they borrow?

You can borrow four to five times your salary, so its difficult to judge exactly how much your child will need when you don’t yet have accurate information about their future earnings.  Of course, there will be lots of other different variables, based on their credit score and the type of property they are interested in.  I can however start looking at ways to invest my money to hopefully provide them with an upfront cash deposit when they need it.

Invest Early

property ladder

Start planning for giving your child that all important boost up the property ladder from the moment they are born.  The article mentioned that you can be riskier with investments if you have enough time before you need the cash as the fluctuations with balance themselves out.  Hopefully you will reap more rewards then.  If you only have a short time till you need the money it’s worth sticking to portfolios without as much risk.

Family Offset Mortgage

The article suggests other ways you can help like a family offset mortgage.  With a family offset mortgage savings will be put to good use.  Let’s be honest we don’t get an attractive interest rate on savings accounts like we used too.  So, your child will benefit from lower monthly payments or a shorter term of their mortgage instead.  Hopefully as a result they will save a small fortune in interest payments.  You certainly need to make your money work for you!

I have a few ideas now but would love to hear more suggestions of how you helped your child on to the property ladder.

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