Many parents want to help their children onto the property ladder but don’t necessarily have tens of thousands of pounds sitting in a savings account. This case study shows how David and Helen used the value of their own home to jumpstart their son’s future.
The Situation
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David and Helen owned their home outright, valued at £450,000. Their son, a 31-year-old IT consultant, was ready to buy a £300,000 house and had a strong salary of £45,000. However, he hit a common roadblock:
The Deposit Gap: Because of a recent career move, the son hadn’t been able to save a large enough deposit to secure a competitive mortgage rate.
The Parents’ Dilemma: David and Helen had plenty of “wealth” tied up in their bricks and mortar, but they didn’t have the liquid cash available to give him the boost he needed.
The Goal: They wanted to provide a financial gift without complicating their son’s legal ownership of his new home.
The Professional Strategy
We introduced the family to a multi-generational financial plan that utilised the equity in the parents’ property:
Equity Release Education: We explained how David and Helen could use Equity Release (specifically a Lifetime Mortgage) to unlock a portion of their home’s value tax-free, without having to move out or make monthly repayments if they didn’t wish to.
Structuring the Gift: We helped structure the released funds as a “Gifted Deposit.” This is a clean financial break that lenders prefer, as it ensures the son owns 100% of his new home.
Son’s Mortgage Application: With a much larger deposit now in place, we helped the son access lower interest rates and better mortgage products that were previously out of reach.
Family Coordination: We acted as the central point of contact, ensuring that both the parents’ equity release and the son’s purchase were coordinated through the right legal and financial advisors.
The Result
By unlocking a small percentage of their home’s value, David and Helen provided their son with the “missing piece” of his financial puzzle.
The Outcome: The son successfully purchased his £300,000 home with a significantly lower monthly mortgage payment thanks to the larger deposit. David and Helen remained in their family home, enjoying the satisfaction of seeing their son settled.
Key Takeaways
- Modern Inheritance: Many parents are now choosing to “gift” an inheritance early via equity release so they can see their children benefit from it during their lifetime.
- The Gifted Deposit Advantage: A larger deposit doesn’t just mean a smaller loan; it often unlocks “lower-tier” interest rates, saving the child thousands over the life of the mortgage.
- Financial Independence: Using this method allows the child to be the sole owner of the property, keeping their credit and legal status entirely separate from their parents.