Key features:
Parents wanted to help their daughter in any way they could to purchase her first property.
As a single person earning £40K a year, our client’s daughter was struggling to get the mortgage she needed on her own, so her mother and father were looking into the option of going on the mortgage with her.
They owned their own residential property which meant they would be liable to a large stamp duty tax if they went on a standard mortgage with their daughter.
Our client:
Our client’s daughter was a young professional coming up in the world and wanted to purchase her first home. Unfortunately, in the area she wanted to buy, her salary alone would not secure her a large enough mortgage. Wanting to help their daughter, our clients decided that they would like to go on the mortgage with her to boost her affordability.
As our clients already owned their own residential property, going on a standard mortgage with their daughter meant that they would not only be liable to stamp duty tax, but they would also be liable for extra stamp duty due to owning more than one property. This would total over £50,000.
With no idea what to do to avoid a large tax and still wanting to help their daughter out, our clients turned to Oportfolio for advice and guidance.
How did we help?
Oportfolio advisor Oliver sat down with all the clients and gained a clear understanding of what the situation was and what they wanted to achieve. Taking into consideration all of the client’s concerns, Oliver did his own in-depth research and came up with a plan of action that would benefit all parties involved.
The best route forward for the clients was to do a joint borrower – sole proprietor mortgage. This essentially means that they could all get a mortgage together but only their daughter would be on the title of the property. All three incomes would be used for affordability but as their daughter was the only technical owner of the property, she would only be liable to first time buyer stamp duty which was a huge amount less.
We managed to secure a joint borrower – sole proprietor mortgage for the clients through Metrobank on a competitive product and our clients were able to help their daughter buy her first home. Eventually, once our client’s daughter has progressed further in her career and her salary has increased, we will be able to re-structure the mortgage and remove her parents so that it will be solely in her name alone.
What was the rate?
A 2.09% rate was fixed until 31/01/2027, and after the fixed period, it reverted to the bank’s 3.60% standard variable rate.
The overall cost for comparison is 3.4% APRC. The arrangement fee was £999, and early repayment charges were applied. The mortgage term was 20 years.
