1. Freedom from renting – Renting can offer more flexibility, but owning your own home has many advantages. Homeowners can feel more stable, build equity in their property, and enjoy the freedom to improve and customise it as they wish.
2. Preferential mortgage rates – While 90-95% mortgages do exist, there are fewer options available and the rates are less favourable. Generally, the bigger the deposit the wider the range of mortgage options to choose from. Lenders typically reserve the better rates for larger deposits so the first-time buyer may end up paying lower interest rates overall.
3. Project properties – Many first-time buyers aren’t in a position to make costly renovations when they buy a property. However, with a lifetime gift they could take on a ‘project property’ which may widen their search.
4. Getting it right first time round – Some first-time buyers may not be ready to buy a home until they’re thinking about starting a family, by which time they’ll need more than a ‘first-step flat’. A financial gift can support their needs.
5. A living inheritance they can actually see – The average person will receive an inheritance at the age of 61 years old. By this stage, many people are financially secure and leading a comfortable lifestyle, whereas an earlier inheritance might be more useful. A lifetime mortgage can help your clients’ support their loved ones sooner, but it will reduce any later inheritance and the recipient of the gift may have to pay inheritance tax down the line.
These are just a few examples of how equity-release products can help younger generations get onto the property ladder.
