The Bank of Mum and Dad, With a Twist

7th August 2019

The property market has been unstable ever since the first mention of Brexit, buyers and sellers alike appear to be taking a back seat, hoping the market is in their favour once it all settles down. One thing that hasn’t changed through it all however, is how difficult it is for younger people to get on the property ladder; even young professionals who on paper seem like the perfect candidates are usually unable to come up with their deposit without any third party help.

For a long time the “bank of mum and dad” has worked by way of parents gifting or lending their children the required deposit, but there seems to be a new wave of parents helping their children get onto the ladder by selling their family home to them at under value (therein lies the twist!). Using this route, the parents usually sell the property for the amount outstanding on their mortgage, thereby ensuring their mortgage is paid off, with their children now owning the home and being responsible for their new mortgage.

A notable downside to these transactions is that most high street lenders do not, or at least are not very willing to lend on them. At the moment the only bank that seems to be happy to grant a mortgage on a transaction of this kind is Natwest, whose panel of solicitors we are helpfully on.

If you are considering undertaking a transaction of this kind, please feel free to get in contact with us and our friendly and experienced property team will be glad to help.