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Helping a family member buy their first home - your questions answered

(80 Posts)

GNHQ have commented on this thread. Read here.

LibbyGransnet (GNHQ) Mon 12-Jul-21 09:04:21

This Q&A is now complete - there will be no further answers posted.

Lending or gifting money to family doesn’t come without challenges - it’s a big commitment for both you and them. If you’re thinking of taking the step to help a loved one get onto the property ladder, and you have a question about how it might affect your future plans, this is your chance to ask the experts.

The experts:
Graham Sellar, Head of Mortgage Development, Santander - Graham has more than 30 years of experience working in financial services, and has been a mortgage specialist at Santander since 1996. He is regularly quoted as an expert voice in the media on all things mortgage related.

Hayley Burton, Financial Planning, Santander - Hayley has 25 years of experience in retail banking and 6 years’ experience in the wealth area, where she leads teams across the UK who provide expert, trusted investment and protection advice to customers based on their individual needs and to achieve their financial goals. Hayley is also a Mum and Step Mum to three children aged between 11-16, and so she’s regularly thinking of ways to help her children financially in the future.

Linda Murray, Regional Manager, Santander - Linda has worked in banking for 35 years across a broad spectrum of areas including mortgages, risk and most recently face to face banking in Santander branches. At work, she’s particularly passionate about supporting customers to help them make informed choices about their banking. Linda is also a single mum to her 24 year old daughter, Charlotte. She’s looking to support Charlotte financially and emotionally when she buys her first home.

Do you have questions around what to consider when deciding to help loved ones? Or perhaps you’d like to know more about what help you could provide (financial and non-financial)? And if you do help with a gift, loan or early inheritance, would it have an implication on your own future? The Santander experts are here to help and will be back to answer some of your questions between 26 July and 6 August.

All who post a question (regardless of whether it is answered or not) will be entered into a prize draw where one GNer will win a £200 voucher for the store of their choice (from a list).

Thanks and good luck!

GNHQ

Insight Terms and Conditions apply

SantanderExperts Mon 26-Jul-21 15:06:39

FarNorth

I asked Santander about this very thing, and they were unable to help.

I found, elsewhere, that I could get a Lifetime Mortgage - which is different to equity release in that it requires the interest to be paid, so the amount owed does not increase.
Covid, however, altered my relative's plans so we did not go ahead.

Does Santander now offer, or plan to offer, Lifetime Mortgages?

@FarNorth

At the moment, Santander doesn’t offer lifetime mortgages for new customers.

Graham

SantanderExperts Mon 26-Jul-21 15:07:58

Mollygo

We have offered to help my DGD with a deposit for a house. The problem is always how to give them money without problems.

@Mollygo

It's a great feeling to be able to help your loved ones with their homes, and I'm looking forward to helping my daughter with her home too. There are some things to think about to help you reduce any problems you may encounter. You may want to think about your financial future and the impact helping may have. You may also want to consider any tax and inheritance tax implications. Talk to an independent tax adviser or HMRC directly for further information.

For more things to think about take a look at Step-up: Helping family to buy > How might helping affect you?

If you need further assistance, you may find it useful to talk to an independent financial advisor. You can visit www.unbiased.co.uk to find an advisor.

Linda

SantanderExperts Mon 26-Jul-21 15:09:37

Direne3

I'd love to gift a house deposit to each of our grand-children but when one has 9 it would be but a drop in the ocean,

@Direne3

Sometimes even a small amount can really help. You may be able to help out with some of the additional costs such as legal fees or search fees.

To see what kinds of costs you might be able to help with take a look at Step-up: Helping family to buy > Other ways to help

You may also be able to help them in other (non-financial) ways, such as helping them to decide what kind of home they're looking for or helping them navigate their way around the home buying journey.

Linda

SantanderExperts Mon 26-Jul-21 15:11:45

tanith

I’m Grandma to 9 Grandchildren it’s impossible to help them all and unfair to help one or two so I’m pretty much stuck not helping any of them to get on the property ladder. Which is a shame.

@tanith

It can be hard to help one of your loved ones let alone nine! Whilst you may not be able to help them all with the whole deposit, you may be able to help them with a part of it.

If your grandchildren are still a few years away from buying their own homes, you’ve still got time to open a cash ISA in your name and pay into it regularly or subscribe to an existing cash ISA that you hold up to the annual ISA limit. You can only pay into one of each type of ISA each tax year. Any money paid into an ISA must belong to the account owner. Taking advantage of tax-free saving over several years should get you into a good position to help. However, there are some tax rules around how much you can gift to another person. The Government website details these rules, but you may want to talk to a tax advisor to discuss your own situation. You can find a tax advisor at www.unbiased.co.uk

You can also look at a regular savings account which can pay a higher rate of interest if you put in a certain amount of money each month.

For more information take a look at Step-up: Helping family to buy > Family lending a hand

Hayley

SantanderExperts Mon 26-Jul-21 15:15:16

Lisapaige24

I would like to know what I have to do about giving my daughter a deposit for her first home as she isn’t married to her partner my daughter has a child from a previous relationship but her partner doesn’t have any money to put in for the deposit how does she protect this money I am gifting her as if there relationship doesn’t last and they sell the house or she buys them out is the deposit taken into account in the the resale ?

@Lisapaige24

It's useful to make up an agreement with a solicitor when setting up the property contract and deeds.

Another thing to consider is having a will in place as this will allow you to be very clear what money, shares and other precious belongings goes to who.

If like me, you have two families coming together as one (blended family) things are very complicated and can be emotive. Therefore having someone skilled to help you with this is really quite essential.

You can find out more about the importance of making a will on our Step-up: Helping family to buy > The importance of making a will

Hayley

SantanderExperts Mon 26-Jul-21 15:16:38

Charleygirl5

I could be wrong but I thought if one gifted over £3K per annum to the same household tax reared its very ugly head.

@Charleygirl5

There are some tax rules around how much you can gift to another person. The Government website details these rules, but you may want to talk to a tax advisor to discuss your own situation. You can find a tax advisor at www.unbiased.co.uk

Hayley

SantanderExperts Mon 26-Jul-21 15:18:10

kayewillan

How much can I give to my children without incurring taxes and can my Mother ( their Grandmother) gift to each of my three children too

@kayewillan

There are some tax rules around how much you can gift to another person. The Government website details these rules, but you may want to talk to a tax advisor to discuss your own situation. You can find a tax advisor at www.unbiased.co.uk

At Santander, we accept gifted deposits from family members, including parents and grandparents, so your mother could gift some money to your three children. But again, please bear in mind the possible tax implications for her.

Hayley

SantanderExperts Mon 26-Jul-21 15:19:57

sheebasima

How much interest do you get tax free on savings?

@sheebasima

Information on earning interest from savings without paying tax is available through the Government website

From 6 April 2016 a tax-free Personal Savings Allowance was introduced by the Government. Further details can be found on the our website

Depending on your personal circumstances, if the total amount of interest you receive in any tax year exceeds any Personal Savings Allowance to which you’re entitled, you may have additional tax to pay at the applicable rate. Interest from ISAs doesn’t count towards your Personal Savings Allowance because it is already tax free. Any additional tax payments will need to be directed to HMRC. Further information is available on the Government website, by searching for ‘Personal Savings Allowance’.

Hayley

SantanderExperts Mon 26-Jul-21 15:20:19

Thanks for all your questions so far! We'll be back next week to answer some more.

HebeGransnet (GNHQ) Mon 26-Jul-21 20:54:53

Hi all, this Q&A is specifically for questions relating to helping someone buy a first home so we've removed a couple of posts relating to customer service, but please be assured that we have passed the specific feedback on to Santander.

wendybiv Wed 28-Jul-21 00:46:49

How much you can give family members without it causing tax implications?

Alexander1 Sun 01-Aug-21 19:42:02

I wish everyone happiness in life. everything will be fine.

SantanderExperts Mon 02-Aug-21 13:26:12

Hi everyone - Graham, Hayley and Linda here! We're back to answer some more of your questions.

SantanderExperts Mon 02-Aug-21 13:27:52

marymod

I'd love to gift my son some money for him to use as a deposit but would like to protect it in some way so that it remained his and could not be shared in the event of a relationship split.

@marrymod

If your son is buying a home with a friend or partner you should confirm if the money is for them and the other person and whether the mortgage will be in single or joint names.

To protect the money, you may also want to speak to a solicitor about arranging a ‘Deed of Trust’ - an agreement showing how any equity in the property should be split between the interested parties. You can expect to pay around a few hundred pounds for the solicitor’s time, but it may save more in the long term. The rules may differ in Scotland.

There are some tax rules around how much you can gift to another person. The Government website details these rules. You may want to talk to a tax advisor to discuss your own situation. You can find a tax advisor at www.unbiased.co.uk

Hayley

SantanderExperts Mon 02-Aug-21 13:29:29

cathryn1

looking at using some our equtity but want to safeguard our money in case they split up

@cathryn1

If your child is buying a home with a friend or partner you should confirm if the money is for them and the other person and whether the mortgage will be in single or joint names.

To protect the money, you may also want to speak to a solicitor about arranging a ‘Deed of Trust’ - an agreement showing how any equity in the property should be split between the interested parties. You can expect to pay around a few hundred pounds for the solicitor’s time, but it may save more in the long term. The rules may differ in Scotland.

There are some tax rules around how much you can gift to another person. The Government website details these rules. There are also some tax rules around selling your home. These are also detailed on the Government website (https://www.gov.uk/tax-sell-home). You may want to talk to a tax advisor to discuss your own situation. You can find a tax advisor at www.unbiased.co.uk

Hayley

SantanderExperts Mon 02-Aug-21 13:30:39

msamaranth

This is something we are planning shortly, eldest son has just gone through a marriage breakdown. Is there anyway we can say the money we gift him can only go to him or my grandson in the event of him forming a new relationship and wanting a joint mortgage again?

@msamaranth

You could draw up an ‘agreement’. Everything is down on paper and so everyone knows where they stand. Deciding to draw it up yourself or having it done more formally with the help of a solicitor depends on your own family situation.

Then if your son decides to buy with a friend or partner in the future, it could be worth suggesting to him that he speaks to a solicitor about arranging a ‘Deed of Trust’. This is an agreement showing how any equity in the property should be split between the interested parties. You can expect to pay around a few hundred pounds for the solicitor’s time, but it may save more in the long term. The rules may differ in Scotland.

There are some tax rules around how much you can gift to another person. The Government website details these rules. You may want to talk to a tax advisor to discuss your own situation. You can find a tax advisor at www.unbiased.co.uk

Hayley

SantanderExperts Mon 02-Aug-21 13:35:26

gran1

I am thinking about giving or possibly lending money to my daughter to get on the property ladder by buying a small flat.
Having read through all the other contributors' comments, many of which are negative about Santander, I wonder what Santander offers in this area that is unique and why I should choose them to explain my best options?

@gran1

It’s a great thing to be able to help your daughter get on to the property ladder if you’re able to, but there are a lot of things to think about before deciding to help them. I’m also looking to help my daughter buy her first home and it can be tricky to know what is best for your own situation.
You can visit Santander’s Step up: Helping family to buy information pages to help you to understand the things you need to consider.

There are some tax rules around how much you can gift to another person. The Government website details these rules. You may want to talk to a tax advisor to discuss your own situation. You can find a tax advisor at www.unbiased.co.uk

Linda

SantanderExperts Mon 02-Aug-21 13:36:54

shanti

I am keen to help with the deposit but would it be possible to set it up so when the house is sold I get my amount of the deposit back? This way it could then be available for another family member.

@shanti

It's helpful to draw up a loan agreement. Everything is down on paper and so everyone knows where they stand. Deciding to draw it up yourself or having it done more formally with the help of a solicitor depends on your own family situation. A loan agreement would cover things like repayment amounts, the repayment schedule, and any interest to be paid. You may want to consider discussing the terms of the deposit with your whole family so that everyone is aware.

Different mortgage providers have different policies on deposits that are loaned and you may want to take this into consideration. At Santander we consider applications where the source of deposit is a loan. At application we’ll need some additional information about the terms of the loan, and the loan repayments will be taken into consideration as part of the mortgage affordability assessment.

For more information visit Step-up: Helping family to buy > How might helping affect you?

There are some tax rules around how much you can gift to another person. The Government website details these rules. You may want to talk to a tax advisor to discuss your own situation. You can find a tax advisor at www.unbiased.co.uk

Hayley

SantanderExperts Mon 02-Aug-21 13:38:51

jeanio

I would like to help my daughter to get on the property ladder by giving her a lump some as a deposit but I worry that she might not be able to keep up the mortgage payments as her job is not permanent at the moment.

@jeanio

Some mortgage providers won't lend to you if you haven’t been working in your current job for a certain amount of time, and others will only approve you if you've been in continuous employment for several years. Being on a temporary work contract won’t necessarily stop your daughter from getting a mortgage, providing she has been in the current position for at least 12 months without any breaks in employment.

As part of the mortgage application, lenders will carry out an affordability assessment which looks at income, expenditure, and credit commitments. You can find a host of calculators on our website to understand how much your daughter is likely to be able to borrow with Santander based on her personal circumstances.

There are some tax rules around how much you can gift to another person. The Government website details these rules. You may want to talk to a tax advisor to discuss your own situation. You can find a tax advisor at www.unbiased.co.uk

Graham

SantanderExperts Mon 02-Aug-21 13:42:45

hopezibah

Would love to know more about how to be able to help your children get on the property ladder in the most efficient way - i.e. is there a way to keep part ownership of a property but for the mortgage to mainly be the responsibility of the child (i.e, not an actual child but your grown up children). It's not something we've ever looked into before but as our son hits university age, we'd rather be putting money towards a home than just paying for rental accommodation for all those years if that is a possibility. Depends on many factors as to whether we could actually do it and where he ends up living as some areas the prices would be way to high to even contemplate this.

@hopezibah

There are several ways you could help your children get onto the property ladder. A guarantor mortgage lets you help your loved one get onto the property ladder using your own assets as security. You’d be liable for any payments missed by your child and would be required to make the payments. A charge would also be held against your own home by the mortgage provider as extra security so it could be at risk of repossession if payments aren’t made. Santander doesn’t offer this type of mortgage.

Another option is a joint mortgage with your child. You’d be equally and legally responsible for the mortgage repayments and named on the property deeds. If you still have a mortgage on your own home, you’d need to make sure that a lender would be comfortable that you could afford to pay for two mortgages.

Taking out a joint mortgage also means your own credit worthiness will be taken into account during the mortgage application, which could mean your child may be able to afford a more expensive property. It also means your credit file will be linked to your child’s, so if either of you experiences a negative effect on your credit file it will impact the other too.

Also, as you’re technically buying a second home additional stamp duty would be payable on the purchase. There may also be capital gains tax implications when the property is sold. For further information you may find it useful to speak to an independent tax adviser or HMRC directly.

Alternatively, you could gift or loan the deposit to your child.

You mentioned that you would rather be putting money towards a home. You may wish to consider buying a second property in trust. There a several types of trusts available which all have a varying degree of control. A solicitor would be able to help you set up whichever trust you choose. Depending on the type of trust you go for, there may be tax implications to consider when the property is sold.

You should speak to an independent financial adviser for more information about using a trust to buy a property. You can find an independent financial advisor at www.unbiased.co.uk

For more information take a look at our Step-up: Helping family to buy pages.

There are some tax rules around how much you can gift to another person. The Government website details these rules. You may want to talk to a tax advisor to discuss your own situation. You can find a tax advisor at www.unbiased.co.uk

Graham & Hayley

SantanderExperts Mon 02-Aug-21 13:44:00

RainbowChild

It’s my understanding that if you gift a sizeable amount to a son or daughter etc but then pass away within 7 years of gifting it that they then would be liable for inheritance tax. Some sort of tax always seems to get you one way or another!

@RainbowChild

There are some tax rules around how much you can gift to another person, including a time period in which inheritance tax is payable on gifts given before a person’s death. The Government website details these rules, but you may want to talk to a tax advisor to discuss your own situation. You can find a tax advisor at www.unbiased.co.uk

Hayley

SantanderExperts Mon 02-Aug-21 13:45:21

lollipop123

I’m not in a position where I need to help out just yet but I’m really worried about the best way to go about it when I do. I have 2 daughters who I would love to help out with their own properties but want to know the best way to do it that won’t mean I lose out to the tax man. Don’t understand how if I’ve paid my income tax already on the money I’ve worked so hard for, how I could be liable for being taxed again if I gift it to my children.

@lollipop123

There are some tax rules around how much you can gift to another person. The Government website details these rules, but you may want to talk to a tax advisor to discuss your own situation. You can find a tax advisor at www.unbiased.co.uk

Hayley

SantanderExperts Mon 02-Aug-21 13:46:11

BravaJoseph

What exactly is Inheritance Tax ?
How can the average 50+ pensioner navigate it legally ?

@BravaJoseph

Inheritance tax is a tax on the property, money, and possessions of someone who has passed away. The Government website details these rules, but you may want to talk to a tax advisor to discuss your own situation. You can find a tax advisor at www.unbiased.co.uk

Hayley

SantanderExperts Mon 02-Aug-21 13:46:41

Thanks so much for all your questions. If you need any more information, we'd recommend visiting our Step up: Helping family to buy pages on santander.co.uk where you'll find a wealth of tips and information.

LibbyGransnet (GNHQ) Mon 02-Aug-21 13:49:36

Thanks to everyone who took part in the Q&A.

The winner of the prize draw is @ems07957 - congratulations!