How Can your Property Fund your Children's First Homes?
For many parents, witnessing their children or grandchildren embark on the journey of first-time buyers is a profoundly fulfilling milestone. However, the rising property costs, especially in city areas, can make saving for a deposit a daunting task.
According to research commissioned from Legal and General and carried out by the Centre for Economics and Business Research (CEBR).
“In 2024, 42% of all homes purchased by buyers under the age of 55 have had help from parents or grandparents. This study also found that 19% of those property purchases were made by the parent or grandparent either using equity release, downsizing or remortgage.” Coining the term ‘Bank of Family’.
This research suggests that 74% of those making significant financial gifts do not seek formal financial advice.
This is where a second mortgage company can play a pivotal role in empowering you to understand the second mortgage loan options available to you and how you can help your family achieve their property dreams.
We offer competitive interest rates and personalised repayment plans. Our experts can offer guidance through the second mortgage process. Easing the financial burden and making your relative's homeownership goals a reality.
Leveraging Your Property Wealth
One of the easiest ways to help fund your children’s or grandchildren’s first-time home purchase is by using the equity you have gained in your property. By using the equity, you can help your children with a larger down payment on a property. Intern, this can also help them get a lower interest rate on a mortgage.
Not only is a second charge loan a great way to assist your children in purchasing a home. It offers you the opportunity to make use of the investment you've made in your property.
The second mortgage company offers flexible second charge loan plans. These plans allow you to access some of your property's value without selling your home. Whether your family is purchasing their first home or setting up a new business, the money released from your property can give them the investment they need.
There are two types of second mortgage that are generally available.
One is a traditional second mortgage whereby a borrower applies to borrow a specific amount, say £50,000. On completion of the application process the borrower receives the full amount that they applied for (£50,000) and they start making repayments approximately a month after the loan completes.
The second is a HELOC, or Home Equity Line of Credit. It is a type of loan in the UK that allows homeowners to borrow money against the equity they've built up in their property. It's a flexible loan that offers a line of credit, like a credit card, but with a much higher limit and lower interest rates.
HELOC loans can also help pay for home improvements, clear debts, or help with family expenses like weddings or education.
HELOC loans and their benefits?
The big benefit of a HELOC loan is that you only pay interest on the amount you owe at any one time. Interest is charged on the outstanding balance It’s a line of credit that you can draw from and repay as needed, up to the agreed limit.
This flexibility is great in certain circumstances such as when someone wants to carry out an extensive home improvement project. While you can apply initially to borrow say £160,000 to complete the whole project, once agreed, you can withdraw amounts as and when you need them. You might for example withdraw £50,000 to start the project, take another £75,000 to advance the project further, and then withdraw the final £35,000 to complete the project.
Other variations:
- HELOC loans are repaid on a capital and interest basis, also known as the repayment method. This means that with each monthly repayment made, you are repaying the interest, and part of the capital.
- HELOC loans are normally offered on a variable rate of interest, meaning that the interest rate can go up or down at any time, or a fixed rate basis. With a fixed rate loan, the interest rate is typically fixed for the first 3 or 5 years. The interest rate then reverts to a variable rate loan.
It is important to understand the specific terms and conditions of a HELOC loan. The Second Mortgage Company is here to help you determine which line of credit best suits your needs.
Navigating the Process with Confidence
Making decisions about a HELOC loan or traditional second mortgage can be complex. That's why we pride ourselves on providing you with comprehensive support and guidance. All our loan plans have competitive interest rates and flexible repayment terms to suit your needs.
We understand the potential impact on your financial situation and provide detailed comparisons of the different HELOC loan options available to you and the costs involved. We guide you through the maze of information to help you and will recommend a product that best suits your requirements.
It’s important to make the right decision, after all, your property is your most significant financial asset.
●Transparent Explanations: Our experts will clearly explain the HELOC loan terms and conditions associated with withdrawing payments. We are here to ensure you fully understand the implications of these financial decisions.
●Tailored Solutions: We will create customised plans tailored to your specific needs and goals. Every plan we make will consider your financial situation and risk tolerance.
At The Second Mortgage Company, we understand that achieving your financial goals involves a personal touch. That's why we provide ourselves with the services we provide. As specialist brokers, we tailor all of our financial services to meet your needs.
This way, you can navigate the process with confidence. Our dedicated team is committed to ensuring that you feel supported beyond traditional second mortgage services.
Whether you're looking for a HELOC loan to fund home improvements, or assist in school fees, we are here to support you.
Contact us today to arrange a consultation with one of our experienced advisors and take the first step towards achieving your property goals.