Loan it, don’t gift it
70% of parents say their support for their child is a gift. But whilst gifting your child the cash they need may seem like the right thing to do, it could leave you (and them) unprotected. For example, if your child and their partner separated, you could both lose the money. By loaning instead of gifting, your money is protected. And you can always make a gift of that loan later, when you feel more relaxed about the situation or their relationship matures.
Tell the mortgage lender you’re involved
If you’re contributing to the property purchase, make sure your child tells their mortgage lender from the start as any third party involvement could impact the mortage offer later on.
Strongly consider the possibility that at some point you may need the money back. Ensure your money is protected by a Declaration of Trust which states that the house is to be sold if you need the cash back and agree fair terms so you and your child are both protected.
Protect your other children
If you’ve borrowed the money to fund your child’s purchase, or simply used savings, this could affect what is passed onto your other children when you die. Ensure you have a Declaration of Trust which is clear about how the funds should be settled between all parties in the event of your death.
Register a restriction at the Land Registry
If you want to guarantee a return of your investment, you need to do this to ensure your child cannot sell the property without your consent. Whilst this is unlikely to happen, it’s always a good idea to be protected.
Remember, it’s taxable
If you see your contribution as an investment which will give you a return, remember that even if your name isn’t on the property deeds, any profit you make may be taxable as income tax or capital gains tax.