23 Aug 2017
Parents need to be aware of a wide range of unexpected costs and risks when helping their children with a house deposit.
Mutual insurer Royal London has now highlighted issues which dads and mums need to consider and some of the potential pitfalls.
Helen Morrissey, of Royal London, said: “Steep house price rises in recent years have made it difficult for younger people to get on the housing ladder, and it is understandable that parents want to help.
"However, making the decision to hand over a large sum of money, whether as a loan or a gift, is a major financial commitment and parents need to consider all the options before deciding to do this.
"Parents must ensure they are aware of the potential tax implications. Giving away or lending a large sum could affect them further down the line if their circumstances change.
“In addition, arguments over whether money needs to be repaid, or over what time period, have the potential to cause considerable harm to the parent/child relationship.
"It may seem very formal but all parties should consider taking legal or financial advice and, if needs be, get something down in writing. Taking this approach can bring much-needed clarity to the process and save both parties a lot of grief.”
Issues and potential pitfalls highlighted by the insurer include: