September 29, 2020

BoMaD – The Bank of Mum & Dad

bank of mum and dad - second charge mortgages

It has been there for many first-time buyers over the years – a life-changing option that can only come from generous and empathic parents - but never has it been so utilised than in today’s world. COVID-19 has resulted in the reduction of products on the market, and the products available have much more stringent criteria as lenders appetite at higher loan to values has dramatically fallen. Which means the more deposit you have the easier it will be to get a mortgage. This is why there has been a greater need for help from parents when it comes to first time buyers trying to get on the property ladder.

It is not just Mum & Dad who are gifting their children. With the current global pandemic, this bank has extended to other members of the family who are helping their grandchildren, nieces and nephews to finally own their own home.

Buying a first home has always been a daunting prospect

There are many obstacles facing first time buyers - whether this is due to a low salary, they don’t have a large enough deposit or they have credit score issues which can be due to a lack of active credit– it can sometimes seem impossible. Many renters have resigned themselves to just that – renting…forever. They just can’t imagine being able to have enough money to own their own property and are just accepting that fate, effectively paying someone else’s mortgage through rent which is often more expensive than the equivalent mortgage payment would be.

What if the BoMad doesn’t have enough funds to gift or even lend to family members?

They might have a strong desire to help out their family but simply don’t have enough themselves. This is where a Second Charge mortgage can be the perfect solution if they own their own home.

Many parents will not want to remortgage their home due to early redemption fees. They may also find it hard in the present situation to get a loan from a high street bank due to the current financial climate. Their age might also be a problem as much of the high street mortgage facilities no longer extend into retirement age, restricting the available lending term and often making the situation unaffordable for lending. Second Charges can be a great way to help your family get their dream home, releasing dormant equity in parents’ homes to give their children or relatives a start on the housing ladder. Second charge mortgages can be obtained fast and are a cost-effective way to borrow against the value of your home with the flexibility to help where traditional lenders may fall down.

For more information about Second Charge mortgages, drop us a message or call us on 020 8731 5333.

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