News: Joint mortgages with a parent on the increase

A growing number of parents are pooling resources to jointly purchase new homes with their first time buyer children reports a house builder.

By buying a property jointly, parents can help their children onto the housing ladder by boosting their affordability and enabling them to buy a home that would have otherwise been out of reach. For the parents it may operate either as an investment or a gift, reports Linden Homes.

Both the parents and their son/daughter are named on the mortgage deed, and the lender bases its decision as to how much it will lend on the combined income of all the applicants. Typically, the available mortgage is calculated by subcontracting the parents’ own mortgage repayments from their income and multiplying by four, then adding in the child’s own salary.

Philip Davies, Chief Executive of Linden Homes commented: "Buying jointly with parents is becoming increasingly popular as children struggle more and more to fund their own first home purchases."

"Gifted deposits have been a common solution in the past, but as property prices rise even further out of reach of starting salaries, bridging the affordability gap becomes a bigger problem, especially in London and the south east."

A joint purchase requires a much greater commitment on behalf of the parents than a gifted deposit, but there are advantages for the parents too. They are likely to have more input into the choice of property and closer control over decisions made concerning their investment than if they had simply gifted a deposit.

In addition, joint purchases can be a great way for parents to make an additional property investment whilst assisting their child in their first property purchase.

First time buyer Emma Brickwood, 22 was struggling to get onto the housing ladder until her mother Susan came to the rescue and offered to jointly purchase a two-bedroom apartment at Linden Homes’ Evolution development in Leatherhead.

Susan Brickwood entered into a joint mortgage on the £232,500 apartment, allowing her daughter to secure the property she wanted rather than continuing to rent. Emma, who works as a trainee Chartered Accountant and earns a salary of £22,000 per annum, said, "My salary while I’m training is not large enough to buy my first home, so without my mum’s help it would have been impossible. Her investment means I can relax in the knowledge that I am on my way up the property ladder."

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