Home-buyers who turn to the “bank of mum and dad” should prepare for all eventualities, as generous family members tighten their belts and call in the loan.
The property department at Osbornes, which is one of the national Law Society’s Conveyancing Quality Scheme members, says that many people have no choice but to turn to parents, grandparents and other family members to help raise a deposit for a house without even considering the possibility that their family lenders might need the loan back!
Maria Elliot, an associate at Osbornes comments:
“Handing over a large amount of money, which could be someone’s life savings, with no legal structure in place is an unwise move. Circumstances can change drastically. Couples buying their first home might borrow from their parents when they buy, but what happens if they subsequently separate?”
“There may be potential problems in relation to who own what, which could cause lengthy dispute”.
It is important to consult a solicitor on loan agreement terms, even though you may be borrowing from family members. This forward planning may help avoid what could become a family fall-out.
In these times of economic uncertainty, it is very possible that the bank of mum and dad needs to call in its debts. An agreed timetable for repayment can help to ease any potential problems for all parties involved.
Stamp Duty Holiday
With the stamp duty holiday for first-time buyers buying properties under £250,000 due to end on March 24, there could be a rush to buy amongst first time buyers.
With lending from the major banks still cautious, first time buyers will inevitably turn to other sources, such as family members, for help to take advantage of the stamp duty holiday. Not seeking legal advice could cost you dear in the long run.
The property team at Osbornes will talk through with you all the options available, and provide alternatives, such as parents acting as loan guarantors or entering into a joint ownership agreement.
Our property solicitors are highly experienced in navigating the maze of paperwork and dealings with house purchases. Not only will our experts offer the best advice and service, as recognised by our CQS status, but we will also help to avoid some unforeseen hazards that may occur down the line.”
Osbornes Solicitors underwent a rigorous application and assessment by the national Law Society to become part of CQS initiative, which recognises high quality in residential conveyancing.
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