Sam Dunn: 'What's the best way to use the bank of mum and dad?'

House Doctor
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The Independent Online

Question: I'm keen to buy a flat in Bristol but need financial help from my parents. Are there still any special deals allowing my father to be a joint signatory with me for a new residential mortgage? Or would it be easier for me to simply take his offer of help with a deposit. CS, by email

Answer: First step as a baby, first tumble, first tooth falling out, first day at school – and now first property.

Traditional demands for parental support have taken on a more financial flavour over the past few years, as helping a child onto the property ladder has almost turned into another rite of passage for the middle classes.

The decade-long property boom from 1997 that saw the average house price more than double in many parts of Britain to over £170,000 left a first home way out of reach for many.

Now one in four parents now plan to help their children buy their first home, according to Lloyds TSB.

Although the recession has forced lenders to cut back on the number of mortgages on offer and demand ever bigger deposits from first-timers, joint home loans have largely been spared the worst.

In your case, a joint mortgage with your parents shouldn't be a problem, says Katie Tucker at broker Mortgageforce.

"Most lenders should let your father be on a joint mortgage with you, and if his own mortgage is small, another loan is allowed as long as his total liability doesn't exceed three-and-a-half times his salary."

For example, Bank of Ireland offers the 1st Start mortgage, says Melanie Bien at broker Savills Private Finance. You can borrow up to 95 per cent of the purchase price – one of the highest loan-to-values (LTVs) on the market – which means you only need a small deposit. Its rate is pretty reasonable too: a three-year fix at 5.99 per cent.

"With a joint mortgage, you would be jointly liable for the repayments while the other advantage is that your parents' income is also taken into account when deciding how much you can borrow."

Assuming they earn more than you, this means you could take out a considerably bigger mortgage than you could on your own.

Note that, with any joint mortgage, both parties are named on the mortgage and property deeds.

On the downside, this could store up potential problems for the future as it adds his share of your property to his estate for inheritance tax calculations.

"If you want to keep your affairs a lot simpler," says Andy Montlake at broker Coreco, "using your parents' cash towards a deposit will be more effective."

If money really is as tight as it sounds, ensure that home ownership is something you really can afford.

"How will you cope if you lose your job, for example, and you're on a tight budget?" adds Bien.

"Although you say your parents can help, will they really want to fund the entire mortgage? It's worth discussing it with them.

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