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CASE STUDY FIVE
GRANDSON'S HOUSE DEPOSIT
Mr & Mrs E were both in their early 60's and had one daughter and one grandson. Their grandson had recently finished higher education and had started full time employment as an accountant but was desperate to buy his own home with his girlfriend that had just become pregnant.
He wanted to stay in the same area as his parents and grandparents, but due to the cost of houses in the area, couldn't foresee being able to save the deposit he needed for a property for many years to come.
The grandson had studied for many years and now needed a home of his own for his family, and crucially outside space for his 1st child. He had a hefty student debt accumulated that would need to be repaid over a number of years and not enough of a deposit to look seriously for a new home.
His parents could not afford to help out and so Mr and Mrs E wanted to do exactly this.
They were happy with their current and future income and lifestyle, but did not want to use their savings completely to help their grandson.
They decided to sit down with one of our advisers to discuss what might be possible and their Financial Adviser sat in the meetings with them to make sure that they were getting holistic advice. In fact it was their Financial Adviser who referred them to Viva, after helping other clients of hers.
Mr and Mrs E took out a Lifetime Mortgage for £100,000 and used £25,000 of their own savings to gift £125,000 to their beloved grandson. This in turn, enabled him to buy a property with his girlfriend in the same area as the family and get their foot on the housing ladder. This deposit also meant that the first time buyers could easily afford the mortgage payments and would not be restricting their own disposable income too much.
The Financial Adviser explained that there was also the potential benefit of the gift to the grandson becoming potentially exempt after a period of 7 years, meaning that there was a potential 40% saving of inheritance tax on this gift – potentially a whopping £40,000!!!
This was of course an extra unforeseen benefit to the clients, but one that they were very happy about!!!!
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