How the chancellor’s energy VAT cut could help you eco-boost your home

young family with solar panels

After energy regulator Ofgem increased its energy price cap by 54% this spring, you might be searching for ways to update your home that could mitigate your long-term energy costs.

Responding to this issue in his spring statement, chancellor Rishi Sunak announced new measures to help Brits tackle the rising cost of fuel and energy in the UK.

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5 alternative ways to help your children buy a house without giving away cash

woman hugging man with key in hand

If you have adult children who are making their own way in the world, you could have plans to help them with one key milestone: buying their first home.

House prices are rising all around the UK, meaning some people will find getting onto the property ladder more challenging than in previous years. The Office for National Statistics (ONS) reports that, between February 2021 and February 2022, Scottish house prices rose by more than 10%.

The pandemic has also played a part in the plight of the first-time buyer. An FTAdviser report claims that the average age of a first-time buyer in the UK was 34 in 2021, up two years from before the pandemic.

As a result of the challenges first-time buyers may face in the modern world, more and more parents have decided to provide their kids with financial assistance when they buy their first home.

Research from Savills states that in 2021, the Bank of Mum and Dad helped with 49% of first-time home purchases in the UK. These handouts totalled around £10 billion.

While providing a cash gift to first-time buyers can be a great option, there are other ways to help your adult children onto the property ladder without gifting money directly.

Read on to find out five alternative ways to help your adult children onto the property ladder.

1. Allow adult children to live at home rent-free

One of the main challenges first-time buyers encounter when saving to buy a home is accumulating a large enough deposit. If they are renting a property while saving up, they could find it difficult to save enough money for a substantial down payment on a house.

To allow your kids to save a larger deposit from their own salary, thereby giving them the chance to secure the mortgage they want, you could allow them to live at home rent-free while they work towards this goal.

They could then save the amount they would pay in rental fees into a Lifetime ISA (LISA) or Stocks and Shares ISA, for example, and more easily meet the required deposit amount for their dream first home.

2. Take out a joint mortgage with your child

If you are reluctant to offer a lump sum to help your child onto the property ladder, but are willing to provide some financial assistance, a joint mortgage could be a great option. Especially if your child is buying their first home alone, not with a partner, your input on a joint mortgage could be gratefully received.

A joint mortgage considers both of your incomes when determining what you can borrow, and splits the responsibility of mortgage repayments between both homeowners. It means that, if your child cannot make their repayments, you are liable to make up the difference.

This could be an advantageous option if you want to help your child financially, but aren’t prepared to offer a lump sum of cash upfront.

3. Get a “family mortgage”

A “family mortgage” is a mortgage that allows borrowers with as little as a 5% deposit to buy a home, with an added level of security provided by you, the “helper”.

As the helper in a family mortgage, here is how your financial aid could be used.

  • You transfer a lump sum, usually around 5% to 10% of the property price, into a savings account with the lender.
  • This sum remains in the account for a fixed term, usually three to five years, after which it is returned to you with interest.
  • If the homeowner fails to keep up repayments, your funds may be used to repay the debt.
  • If mortgage repayments are kept up for three or five years, your money is returned in full.

A family mortgage could be a beneficial choice for you, if you wish to offer an extra level of financial security to your child, without simply gifting cash.

Of course, there is the chance your money could not be returned to you if your child does not repay their mortgage on time.

However, if you trust that your child can make their payments over a fixed period, and you can afford to be without this lump sum for a number of years, this could be a great way of providing them with the boost they need.

4. Act as a guarantor on their mortgage

Another way of offering a helping hand to children buying their first home is to act as a guarantor. You may have gone through a similar process when your children have rented properties while studying, for example.

Being a guarantor on a mortgage means you are liable to make any repayments that the homeowner, your child, fails to pay. By signing on as a guarantor, you promise to be the “backup” if your child can’t pay their mortgage.

Once again, being a guarantor can allow you to help your child onto the property ladder, while not actually parting with any money. However, as with all agreements like this, there is a risk that you could be liable to repay the entire debt, if your child cannot pay.

5. Loan cash rather than gifting it

If none of these options seem right for you, you could decide to offer cash that makes up part of your child’s deposit, or provides funds for renovations if they decide to buy a less expensive “fixer-upper”, for example.

However, you may not be in position to give this money as a gift. So, you could discuss the option of giving this cash as a loan, that will be repaid over a fixed term that works for both parties.

That way, you can still give your child the financial assistance they need, while safe in the knowledge you will recoup your funds in the future.

Get in touch

Loaning or gifting large sums of money, or acting as a participant in your loved one’s mortgage, is a big decision. When you go down this route, it can be highly constructive to seek the guidance of a seasoned professional.

Working with a mortgage expert can help soothe any concerns you may have, and could enable you to decide which of these options, if any, is the right course of action for you and your family.

If you are planning to help a loved one onto the property ladder this year, get in touch with us today. Email [email protected] or call 0131 339 2281 to speak to us.

Please note

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

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3 easy ways to reduce the stress of buying a home

Stressed man

When you consider the stressful factors in modern life, you might feel overwhelmed at times.

The UK’s current cost of living crisis, compounded with two years of the Covid-19 pandemic and the ongoing war in Ukraine, could be enough to make you feel stressed day-to-day.

What you may not have considered, though, is that even positive life milestones can cause stress too. Indeed, research published by Mortgage Strategy magazine claims that one major achievement – buying a home – is described by many as even more stressful than having Covid-19.

This survey concluded that 85% of homebuyers felt the process was stressful at times, of which 27% described the process as “very stressful”.

So, here are three ways to feel less stressed about buying a home, so you can enjoy this milestone for the amazing achievement it is.

1. Prepare far in advance of your mortgage application

When you apply for a mortgage in 2022, you may need to make extra preparations in order to boost your chances of securing the deal you want.

In the first quarter of 2022, many lenders began tightening their mortgage lending criteria in response to rising inflation in the UK. This could mean it’s harder to secure the mortgage deal you want. So, preparing far in advance of your mortgage application, by saving a larger deposit, for example, could help you meet the more stringent criteria.

In addition, you could secure an agreement in principle (AIP). We can help you to obtain an AIP to help you figure out the kind of mortgage you might be able to afford.

If you are concerned about applying for a mortgage in an uncertain time, contact us today. We can assess your options and find the most appropriate lender for you.

2. Take your time

One way you could reduce the stress of buying a home is to accept that sometimes, finding the right home takes a long time.

Often, homebuyers put pressure on themselves to find their dream home in a fixed amount of time. Of course, there could be viable reasons for this – your term might be ending on a rental property, or you might want to purchase a home before house prices rise again.

However, putting a deadline on finding an affordable, beautiful home you love can cause immense amounts of stress. By taking your time with this process, you could find yourself adopting a more relaxed approach. Plus, you could avoid cutting corners and making rushed decisions, which could cause stress both in the short and long terms.

3. Work with a professional

Ultimately, buying a home can be a complex process, especially in the uncertain times we are experiencing at the moment.

Working with a professional could reduce your stress when you buy a home, even if you have been through this process before. A seasoned mortgage expert can help shoulder some of your financial stress by providing guidance from start to finish, and can instil you with the confidence you need to acquire the home you want.

If you are buying a home in 2022, get in touch. Email [email protected] or call 0131 339 2281 to speak to us.

Please note

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

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Could a log burner be the solution to your rising energy bills?

man putting log on wood-burning stove

If your energy bills are set to rise in 2022, you aren’t alone.

In February, energy regulator Ofgem announced it would increase the UK’s energy price cap by 54%, or £693, from 1 April.

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3 important mortgage admin tasks for the start of the new tax year

woman with calculator

The new tax year begins on 6 April, and with it comes a new opportunity to maximise your financial growth and wellbeing.

You could be looking at your property options for the year ahead, considering applying for a new mortgage, or perhaps searching for ways to reduce the price of your current mortgage repayments.

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3 powerful reasons why remortgaging your home could be the right choice for you in 2022

woman shopping for mortgage options online

As a homeowner, you may be concerned about the rising cost of living being reported around the UK.

According to a March 2022 report in the Guardian, the cost of living crisis is having a “devastating impact” on some families, with energy bills set to rise by more than 100%, in some cases, in the spring.

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Will the new energy rules make it illegal to rent your property in 2023?

man holding clipboard and penIf you have been a landlord since 2018 or earlier, you will know that the Energy Performance Certificate (EPC) rules have been in a constant state of review for some years now, in an attempt to make UK homes more energy-efficient.

Back in 2018, landlords were required to present an EPC rating of E or above in order to legally let out their property on a new lease. Continue reading

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How one woman used TikTok to trade a hairpin for a house

woman holding house keyIf you cast your mind back to May 2020, you may have been deep in a quarantine project.

Perhaps you decided to do some DIY, learn how to knit, write the next great British novel, or binge all five seasons of Breaking Bad in a week. Continue reading

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How far will interest rates rise, and what could it mean for you?

man with calculator and laptop As you may already know, the UK has recently seen another interest rate increase. In February, the Bank of England (BoE) raised the base rate from 0.25% to 0.5%.

While the base rate still remains historically low, this change could still pose challenges to your personal finances.

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5 traditional recipes to celebrate Burns Night in Scotland

family in winter clothes saying “cheers” over the dinner table.

Whether you actively celebrate it or just note it at this time of year, 25 January is, of course, the celebration of Scotland’s foremost poet, Robert Burns.

Burns penned the classic poem ‘Auld Lang Syne’, sung traditionally on New Year’s Eve by people all around the UK, as well as other famous works like ‘A Red, Red Rose’.

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