The term “Bank of Mum and Dad” is becoming less and less unusual these days. It refers to the practice of parents financially assisting their adult children with expenses, especially when it comes to buying a home. In this case, the Bank of Mum and Dad is usually a joint borrower, sole proprietor arrangement where two individuals, typically a parent and their child, become joint borrowers on a mortgage, but only one of them, often the child, becomes the sole owner of the property. Reasonings behind this can include helping the child qualify for a larger mortgage or secure more favourable lending terms based on the combined income and creditworthiness of both borrowers, while allowing the child to be the sole owner of the property.
What you need to know:
This arrangement can be a way for parents to help their adult children become homeowners while still maintaining some level of control over the financial aspects of the property. However, it’s essential for all parties involved to have a thorough understanding of the legal and financial implications, as well as to consult with legal and financial professionals to ensure the arrangement is structured appropriately and that everyone’s rights and responsibilities are clearly defined.
At Hallcroft Finance, we can discuss with you these consideration and provide proper guidance to this alternative homeownership strategy.
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