First-time home buyers are often faced with a difficult decision when it comes to financing their purchase. With rising house prices and the cost of living increasing, many are unable to save enough for a large deposit. Equity release gifting could be the answer to reducing mortgage terms by over 8 years for first-time buyers.
Equity release gifting is a way for parents or other family members to help first-time buyers with their mortgage. It involves the family member gifting a lump sum of money to the buyer, which can be used as a deposit or to reduce the mortgage term. This can reduce the length of the mortgage by up to 8 years, meaning that the buyer will pay less interest over the course of the loan.
There are several advantages to equity release gifting. Firstly, it can help first-time buyers get onto the property ladder sooner, as they will not need to save up as much money for a deposit. Secondly, it can reduce the amount of interest paid over the course of the loan, as the loan will be paid off sooner. Finally, it can help to reduce the stress of saving for a deposit, as the family member will be providing the funds.
However, there are also some potential drawbacks to equity release gifting. Firstly, there may be tax implications for the family member gifting the money, depending on their individual circumstances. Secondly, it may be difficult for some family members to provide a large lump sum of money, and they may not be able to afford it. Finally, it is important to consider that if the buyer defaults on their mortgage, then the family member may not be able to get their money back.
Overall, equity release gifting could be a great way for first-time buyers to reduce their mortgage term by over 8 years. It can help them get onto the property ladder sooner and save money on interest payments. However, it is important to consider any potential drawbacks before entering into an agreement.