Helping secure a mortgage deposit through this method is seen by many as the ultimate ‘financial’ gift.
Lewis Wheeler (pictured) is senior business development manager atSaffron Building Society
On ‘Father’s Day’ many Dads from up and down the country will be receiving an array of gifts and cards from their children showing how much they are loved and appreciated.
Although it’s great to get recognition in this way I suspect many parents prefer the traditional role of ‘provider’ and would actually feel more comfortable ‘giving’ to their children, rather than ‘receiving’. Father’s Day is perhaps the perfect time to reflect.
Gifting a mortgage deposit, whether on Father’s Day or not, is probably one of the most significant gestures a Father (or parents in general) can make to their children. These children, have the potential of course, to become your ‘first-time-buyer’ clients. Facilitating that first step on to the property ladder will be life changing and creates a clear opportunity for brokers.
Home ownership remains important on many levels both socially and economically. Our homes are a place of sanctuary, security and where significant life events and family occasions will take place. A funded deposit opens the door to helping your clients to secure the best possible mortgage for their first property.
A ‘life changing’ gift
Arguably, your first-time-buyer clients are facing some of the most significant financial challenges for decades, particularly when it comes to house buying. Saving for a deposit is a well-known obstacle.
As a result increasing numbers of parents and grandparents who lived through an unprecedented period of economic, social and cultural improvement, are prepared to gift or loan monies to their offspring for a mortgage deposit. Such gifting is helping them to get onto the property ladder much earlier particularly when used alongside one of the many innovative first time buyer mortgages the broker community has access to.
What has changed?
It’s important to reflect how recent history has affected access to homeownership. Although there have clearly been economic peaks and troughs during the last 50-60 years the financial gains made by the so called ‘Baby Boomers’ (born: between 1946 and 1964) and ‘Generation X’ (born: 1965 and 1980) have been significant. Thebaby boomergeneration alone owns more than half of Britain's £11 trillion ofwealth, giving a clear ability to gift funds to their children (many who are now in their 20’s and 30’s and far less financially secure). This situation gives brokers the opportunity to tap into the first time buyer market in a different way.
Gifted deposits open up first-time-buyer market
Helping secure a mortgage deposit through this method is seen by many as the ultimate ‘financial’ gift. The bigger the mortgage deposit, of course the more financing options are potentially available through specialist broker offerings.
Father’s Day and the opportunity to ‘give’ may come and go but I am confident we’ll see more lending activity serviced by brokers utilising this opportunity in the first-time-buyer market.
Parenting is often built on positive shared experiences – facilitating homeownership through gifting the deposit has to be one of the most meaningful gestures that can be given to the next generation. It’s a solution that benefits brokers, their clients and lenders alike.
