Frequently Asked Questions

My child is buying with a partner, what if they split up?
What if I gift the money to my child to help avoid inheritance tax?
As I rely on the interest from my savings, can you help overcome this?
What happens if we need the money back quickly?
I don't have enough money to lend my child, but really want to help, is this possible?
What happens if my child dies before paying me back?

Q: My child is buying with a partner, what if they split up?
A: A charge is put on the property to say that if or when it is sold, you are entitled to the money back. This will resolve the problem.

Q: What if I gift the money to my child to help avoid inheritance tax?
A: In order to avoid inheritance tax you will need to declare this as a gift with no firther interest in the money. Therefore it is not practical to put a charge on the property, as this will be seen as having an interest. To avoid your child's partner recieving some of your money, we can set up a Trust deed for you.

Q: As I rely on the interest from my savings, can you help overcome this?
A: Yes, we can set up a loan agreement with your child so that they pay you what you would have otherwise recieved in interest. The actual amount must be taken into account by the lender when they calculate their affordability. The interest you currently recieve is far less than the savings your child makes and so you can both gain.

Q: What happens if we need the money back quickly?
A: It is possible to add into the agreement an option to repay on demand, but not recommended. It is better to lend/gift only as much money as you can afford to be without unless you have other sources available to you.

Q: I don't have enough money to lend my child, but really want to help, is this possible?
A: Yes, if you have a home of your own it may be possible to remortgage to raise the capital required. The interest rate you are charged is likely to be less (assuming you have sufficient equity) but you will still be responsible for the additional payment. We can set you up with a loan agreement so that your child pays this element of interest but it will be taken into account by their new lender.

Q: What happens if I die before the loan is repaid to me?
A: This can raise two issues; (1)you may want the return of the loan if you have a surviving spouse or (2) you have other offspring who will be seen to be getting less if the loan is not repaid. This can be sorted out in a Will, which we can arrange for you as part of our service. You can also affect a small life policy written in trust, the premium for which is paid by your child. Your child receives the benefit of the policy and repays your estate.

Q: What happens if my child dies before paying me back?
A: If there is a charge on the property then you will get your money back when the house is sold. However, the partner may see a benefit of staying put; then out living you. Therefore it is best to affect a small life policy on your child, which pays you back the amount borrowed.

If you have any further questions, simply contact us and we will endeavour to answer these for you.