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Purchasing property for children under 18

April 29, 2021
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Buying a property for your children is a great way to secure their future. Many parents will look to purchase a property when their children are studying as it will give them a place to live rent-free. If they share with friends, their friends' rental income can pay their way through higher education. And when they finished studying, they have a property they can live in, rent out or sell on.

While you could wait until your children are over 18, there are options to start the process even earlier. There are special mortgage products designed for parents who want to purchase property before their children are 18. This could start as soon as they are born. By the time they are ready to go to university, the property will have increased in value and the future equity could even pay their fees.

Criteria for buying property for your children under 18

In general, you will need to meet the following lending criteria:

  • No minimum age for the children.
  • A limited company would be formed with the parents as “directors'' and the children as “shareholders. The parents are the guarantors of the mortgage and must be aged over 25.
  • Between 20-25% deposit required.
  • The property must be purchased with the intent of letting it to an unrelated tenant.
  • The property could be structured as a single-family let, multi-let or HMO. A holiday let or AirBnb is not permitted.
  • Must have a maximum of 20 properties and up to £10m in mortgages.
  • The mortgage term must be no more than 35 years.
  • The rental yield must cover at least 125% of the mortgage payments.
  • Credit problems over 12 months old may be considered.

If you want to explore how you could secure your child’s future with a buy to let property, explore our guides or get in touch today.

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