Legal Guidance For Families Supporting Property Buyers

Legal Guidance for Families Supporting Property Buyers

Parents loaning money to their children to assist them with the buying of a property are being cautioned to get professional legal advice beforehand, to prevent future family fallouts.

The head of Residential Property at Napthens solicitors, Sarah Barnes, reports that more people wanting to get onto the property ladder are receiving financial support from members of their family commonly parents due to the requirement of big deposits when purchasing a property.

Sarah warns that many are not aware of the legal consequences involved, and run the risk of family fallouts if they are not able to make the repayment.

This advice comes as the Financial Service Authority unveiled more than three hundred thousand lenders owing billions of pounds on interest-only mortgages do not have enough money to pay their debts and have missed or were late with making payments.

Sarah a head leader of conveyancing solicitors Lancashire said: It is familiar to see family members assisting property purchasers, either giving them money as a gift or loaning it to them. However, many of them are not taking their own interests into account.

A loose agreement may be in place with children, for example, that they pay back the money within a number of years, or when the property is sold at a later date.

The repayment details are often vague. Essentially family members need to consider the consequences of the buyer they have provided financial support for if they cant afford the mortgage, or if they are trapped in an interest only mortgage which may not be paid off for a long time.

Family members wanting to provide financial support for buyers must consider whether the payment is a gift or is loaned. If loaned, they need to cautiously think about whether the loan must be paid back monthly, completely at a later date, or increased in line with the value of the property.

It is in the interest of both parties to think about the details of the agreement, and get guidance from residential property solicitors on how to protect their interests.

by: Admin

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