How to help your youngsters flee the nest – and help yourself
We’ve all heard of the Bank of Mum & Dad.
The question is: Does the thought of supporting your children in perpetuity fill you with dread, duty or pleasure?
Sadly, in this day and age it is an increasingly common occurrence as rising house prices and a chronic lack of housing stock have conspired to put all but the smallest or most dilapidated homes out of reach of first-time buyers.
So for those young, or perhaps even not so young, people who lack the building skills to start with a wreck or the fiscal resources to fund a purchase themselves, the reality is that the little darlings will need a little help when it comes to that legendary housing ladder.
For many first time buyers the dream of owning a house seems to get forever further away.
Additionally, more and more of us are self-employed. In fact, according to a report from the Office of National Statistics more than 15 per cent of the UK workforce, some 4.6m people, now runs their own business.
Self-employment brings with it a world of advantages – in an ideal world that means a more flexible life, working at your own pace while you pursue your business dream. And, heck, who wouldn’t want to be their own boss given the opportunity?
But self-employment also comes with disadvantages.
The management of cash-flow is one of the most important disciplines of good business and with that, naturally, is tax management.
Anyone who is in business or self-employed will know full well that putting aside enough money to pay your tax bill twice a year can prove difficult, especially when there is a temptation to use the money for other things.
Another drawback, traditionally, has been freelancers have been denied access to much of the mainstream mortgage market because of their irregular income and, often, a lack of audited accounts. This comes on top of the mounting problem of affordability which affects all first-time buyers.
But now the highly innovative mutual Family Building Society has come up with a new mortgage product to help freelancers and the self employed get a mortgage, as well as reduce their interest payments over the long term.
The same ONS statistics also show that more and more people stay self-employed – we presume because they like it that way. So we have worked hard to understand the needs of self-employed people. Being a building society, we have always understood the needs of home buyers.
And this includes the Bank of Mum & Dad.
So what if there was a mortgage which allows a directly related member of a family to pay surplus cash into a savings account, which will help to reduce the mortgage term?
The Family Building Society’s new flexible Offset Mortgage means you and your family can put money aside which will offset the interest on your mortgage, and could reduce the term of a typical 25-year plan.
It works in a similar way to a standard repayment mortgage except for one important addition – the linked savings accounts into which you and any member of your direct family can deposit funds; a parent or step-parent, grandparent, aunt, uncle, brother or sister.
The Family Building Society Offset Saver Account is linked to the mortgage – which in the normal way is part interest and part capital repayment, with the level of interest payment going up and down with the underlying base rate of interest.
While the savings account does not in itself pay interest, it does offset some of the interest payable, and in effect therefore reduce, the capital sum.
If you held a mortgage for £100,000 and you, or a family member, paid £10,000 into the linked savings account (s), your monthly payment remains the same but the interest is charged on £90,000, thus reducing the capital sum. This means the term of the mortgage can be significantly reduced depending on the sums involved and the term of the mortgage.
So, Mum & Dad, if your not-so-little ones who are beavering away at their own businesses need a little help to flee the nest in a highly efficient and business-like way, the Family Building Society is here to help.
Full details are a phone call or a couple of mouse clicks away.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.