With the increases in the cost of living, it is no wonder why so many young people are unable to get themselves on the property ladder. High house prices and wages that haven’t risen in line with inflation mean it can be tough for younger people to get on the property ladder. If you’re a homeowner over 55, you are in a unique and privileged position where you have the opportunity to potentially help younger family members get onto the property ladder. Now, there are many ways you can do this, which we will explore further on in this article. If you have some younger family members who are struggling to buy their first house, then hopefully this article will give you some helpful tips and tricks. Keep on reading to find out more.
Start Saving When They Are Young
One way you can help younger family members get onto the property ladder is to start saving when they are young. Of course, it is impossible to predict the change in the housing market, but it is usually a good idea to start building up savings whilst your family members are young. This way, there is no rush or need to suddenly provide a lump sum of money because you have been slowly building up those savings over time.
Slowly saving up money over time also takes off a lot of pressure on you. It can sometimes be a struggle to loan out a lump sum of money when you yourself are feeling the weight of the cost of living. Putting money into a high interest saving account will be beneficial as you will slowly gain interest on the savings account over time. Then, when your family member is ready to buy a house, you can gift them the money from what has been saved.
Loan Them The Money
Another way you can help younger family members get onto the property ladder is to loan them money. If you can afford it, loaning your family members a lump sum of money can be a great way to help them secure a mortgage as they can use the money you have given them to put down a deposit. Loaning them the money is, unfortunately, not something everyone is able to afford, but if you have the means, then this could be a good option.
A lifetime mortgage could help you release equity if you are successful in your application. Lifetime mortgages are available for eligible homeowners aged over 55, and it is a way of releasing some of the cash tied up in your home. By doing this, you are then able to use that money to gift to your younger family members which they can then put towards buying a home.
A lifetime mortgage calculator will give an indication of how much money you could release. All you need to do is put in your details, and you can get an idea of how much equity you can release.
Teach Them How To Save
Even if you do not have the ability to loan them a lump sum of money, you could still help your younger family members by teaching them how to save. Being frugal and being good at saving is not something that comes naturally to people and sometimes people just need a bit of guidance, and they can learn how to save properly. If you know that you are good at saving, then you can use your knowledge and experience to help teach younger family members how to save properly.
Spend some time with them and go through their finances and work out all of their monthly outgoings. You can then go through the list and figure out where they can save money. It could be that they are spending money every month on a gym membership, so instead of wasting the money on a membership, you could recommend that they do home workouts instead. Simple switches like this will teach them how to be more frugal, and it can help them save the money they need to get onto the property ladder.
Let Them Live With You Temporarily
Another helpful thing you can do to assist a younger family member with getting on the property ladder is to allow them to live with you temporarily. If your family member is currently renting a property, then it can be very difficult for them to save up enough money for a mortgage. Rent prices currently are getting more expensive, so if you are having to fork out hundreds of pounds every month for rent, then it is unlikely that you can afford to put aside money to buy a house.
So, instead of letting your family member waste their money on rent every month, you could offer your house up for them to stay for a while so they can save. It is up to you whether you want to charge them any money for staying at your property, but even if you just ask for £100, they will be able to save a lot of their pay check. This can make it a lot easier for them to build up savings as they will not have to worry about paying an extortionate amount of money on rent and bills every month.
Be A Guarantor On Their Mortgage
If your family member has secured the money they need to buy a house, but is struggling to be accepted for a mortgage, then you could help them out by becoming the guarantor on their mortgage. Often people are refused a mortgage because the banks believe that they will be unable to make the payments on the house. You would assume that if someone can afford to pay their rent every month that they will be able to pay a mortgage, but this is not the case. Unfortunately, rental payments do not build up a credit score.
So, if your family member is struggling to be accepted for a mortgage, then you can step up and become their guarantor. Being a guarantor means that if your family member is unable to make mortgage repayments, then it will be up to you to foot the bill. Of course, being a guarantor does come with risks, but if you know and trust your family member and you have faith that they can make the needed payments, then it shouldn’t be a problem.
Final Thoughts
Getting on the property ladder can be extremely difficult, especially with the rising cost of living. It can be tricky to save money for a house when you are having to fork out more money just to get by, so it is no wonder why so many young people are struggling to buy their first house. Thankfully, as an over 55, you might be in a position where you can potentially help your younger family members get on the property ladder. Throughout this article, we have gone over a few different tips that can help you support your younger family members through their journey of buying their first home. Hopefully, you can use these tips, and your family member will soon be able to get their keys to their first house!
