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Can Children Own A Property?

Property Saviour » Estate Planning » Can Children Own A Property?

Gifting a property to a child? Minors can own a property in a trust until they reach the age of 18.

Have you thought of all pros & cons of transferring a home?

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Does Age Affect Mortgage in the UK?

An 18-year-old may be able to apply for a mortgage provided that you have a solid credit score, a deposit in the form of regular savings and a permanent job.

You may still require a guarantor who can be a parent or a relative.  Or you could buy a home together with a friend?

Buying Property at a Young Age

Minors cannot purchase property until they turn 18, when it becomes legally theirs. Until then, a trustee must own it for them. The parents are responsible for paying taxes and any other fees associated with the property.

Parents can opt for a bare trust, allowing them to hold the ownership temporarily as a nominee. When the child turns 18, the property will be transferred to them, and they will take responsibility for all payments.

This transfer is irreversible. Once the child reaches the age of 18, ownership of the property will be legally transferred to them regardless of the nominee’s wishes.

To gift this property to your child, it must be mortgage-free.

Can A Minor Own A Property
People aged at or near retirement in the UK may find it difficult to purchase a property using a mortgage. 

Maximum Age Limitations

People aged at or near retirement in the UK may find it difficult to purchase a property using a mortgage.  Lenders may be concerned that if the buyer falls ill or passes away, they may not be able to keep up with payments, leading to a financial loss.

However, there isn’t an upper age limit when it comes to property ownership.  People reaching retirement age may wish to downsize or buy a bungalow or a retirement flat. 

They also release equity to have more money to spend.  Retirement interest-only mortgages are a good alternative to equity release.

Finding the Right Lender

Whether you are a young person trying to buy a property or an older individual approaching retirement, you may face some scepticism from lenders.

Young people often do not have any credit history, which can be a red flag to lenders who are unsure if the buyer will be reliable. Lenders may also be hesitant to lend to older buyers.

The best thing you can do, no matter your age, is to take your time when searching for a lender. Different lenders have different criteria, and not all are the same, so don’t be disheartened if one or two lenders are not willing to work with you.

Tips on Buying a Property at a Young Age

If you turn eighteen and are looking to buy property, it may be difficult without a credit history. But don't worry – we have some tips to help you get mortgage approved.

  • A big deposit is a great way to start. 
  • Start building your credit right away. Consider getting a credit card and making regular payments to help you create a credit history. Be careful not to overspend or miss payments, as this can have a detrimental effect. Small mistakes like late payments can be costly when you start building your credit. 
  • Find a whole of market mortgage broker. This could be a great help if you’re young and want to buy property. Mortgage brokers can help you understand your options and find lenders who are willing to work with young people with limited credit.
  • Shared ownership may be a great option for you.  Remember, if you choose this option, you must live in the property while paying for it.  Your financial history could be linked with other friends you are buying with.  If one friend doesn’t pay the mortgage, then you’d still have to pay their share.
Buying a Property When You Are Older
Clear retirement plan. Lenders may be hesitant to work with you, as when you retire, you will be living off a fixed income.

Tips on Buying a Property When You Are Older

If you wish to purchase a home after reaching the age of 50, you can still get a mortgage.  Here are some tips to get you started:

  1. Increase your monthly payments to pay off the loan before you reach a certain age, such as 70, 80, or even 100. This way, lenders can be sure that the payments will be made.
  2. Clear retirement plan. Lenders may be hesitant to work with you, as when you retire, you will be living off a fixed income. Showing that you have a plan to be able to afford the property after your income changes can help to increase your chances of approval.
  3. Consider having a guarantor. This person would sign an agreement with you and take over the payments should you become ill, lose your income, or pass away. This is a good option if you are unable to find a lender that is willing to work with you.

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