Lowes Magazine Issue 119

PLANNING

Helping with first home deposits

THE PROPERTY MARKET HAS BECOME A much tougher market to enter in 2021. There has been a substantial rises in house prices, even during the pandemic, driven by the stamp duty holiday and the desire of urban property owners to move out of the cities and gain easier access to outdoor space. This has resulted in a sellers’ market, with house prices at their highest level in nearly seven years. Even with the stamp duty holiday having ended in June, house prices remain very high creating continued difficulties for first time buyers to get on the property ladder. It is not surprising therefore, to read reports that older homeowners have been gifting an average of £42,000 to help younger relatives get a foot on the housing ladder. Some provide this funding through

savings, others through releasing equity from their home via an equity release mortgage. These gifts can be driven by emotion and the desire to help younger generations to achieve their home ownership ambitions, but they can also lead to decisions that are later regretted. Key points to consider are that once given away, the money is outside your control; whether you can meet your own living expenses now and particularly, in the future; the potential need to fund long-term care; inheritance tax issues; family inheritance issues. The pandemic has proven we live in an unpredictable world, and we strongly advise seeking Independent Financial Advice on the options available to you before passing on wealth, especially when this involves a financial transaction on your own home.

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