Buying With Your Parents: Case Study
By admin
Issued on behalf of Griffiths Ings Solicitors
IT programmer Andrew Jones has finally got his feet firmly on the property ladder – thanks to his mum.
The 26-year-old graduate had spent a year trying to get a mortgage – only to be told he needed to save harder for a deposit, or he wasn’t earning enough to meet the repayments.
Despite having a good job and a decent salary, all the lenders he approached for a mortgage fought shy of offering him a big enough loan to make that first crucial step in buying his first home.
That was until Andrew’s mum came to the rescue – with a loan to boost his deposit and the financial clout of her own home to act as a safety-net guarantee for the building society.
Mum Judy Maragna, an accounts manager who owns her own home outright in Heol Cattwg, Whitchurch, Cardiff, loaned Andrew almost £8,000 to increase the size of his deposit. She also agreed to be named on the mortgage deed and property deeds – so guaranteeing his mortgage payments in the early years of a loan.
Armed with his new-found spending power, Andrew went home hunting and found a two-bed flat in Woodside Court, Lisvane, Cardiff, on the market at £131,000. He had an offer of £128,000 accepted.
He already had £5,000 saved for a 10 per cent deposit, which left Judy lending her son the remaining £7,800 and helping him out with the legal fees. When it came to getting a mortgage, the Halifax agreed to lend Andrew and his mum £115,000 – with monthly repayments of £602.
Andrew, who moved into his new home three months ago, said: “There is no way I would have been able to buy without mum’s help. Not only couldn’t Isave a big enough deposit and afford the fees, but I wouldn’t have found a lender prepared to take a risk on me as a first time buyer.
“I was saving hard for a deposit for a year, but as fast as I was saving the property values were rising so I needed a bigger deposit. It was one big vicious circle.
“Despite the fact I had a decent job and could afford to pay a mortgage, there were very few lenders who would even consider me. Lenders now seem very cautious about taking any sort of a risk with first time buyers – even those on a good wage.
“However, it was very different when my mum got involved, added the weight of the equity in her own home and her salary to act as a guarantee for my application. With her name on the mortgage deed the lender also had the security they required.”
Judy, who has been a homeowner for more than 30 years, said: “Andrew had been renting for years, but quite rightly he saw that as throwing money down the drain. He had also been saving madly for a deposit, but with property prices constantly rising he was getting nowhere fast. In a situation like that would-be first time buyers can easily lose heart.
“I decided the only way he was going to be able to get a mortgage was if I helped out and that has worked well. Our plan is that after a couple of years I come off the mortgage and Andrew remortgages for a larger loan so he can pay me off. At that point the mortgage and property deeds will be changed to his name only.”
