Parents are helping their children by remortgaging (equity release) to fund education; university and deposits for their siblings first time property purchases. In other cases guarantor mortgages allow parents to combine their income earnings with that of siblings.

Property Beyond Reach
Parents are remortgaging to help their children make the first step on the property ladder. Taking advantage of dramatic increases in their own property value to help sons and daughters buying for the first time in a market that is otherwise beyond their reach. The remortgaged money is then used by the siblings as a deposit which when combined with their own savings and a mortgage gets them onto that all important first step of the property market.

Inheritance Tax
Such schemes are also proving attractive to parents as it can offer a way of inheritance tax planning - an issue which has come to the fore as dramatic increases in property values are pushing more and more parents into the inheritance tax bracket with the risks of substantial tax claims on their estates on death. However careful advice needs to be taken, for example if a parent acts as a guarantor he or she may end up on the deeds of their childs property and as such there could be capital gains tax issues at a future date.

University and educational fees
However such capital raising is not limited in helping children when they reach a certain age. Parents are equity raising money from their property to invest in bonds and trusts even when their children are toddlers to provide an income to fund educational needs at a later date. Again, careful tax advice needs to be taken and changes in certain trust laws means the chancellor is closing down on certain family trusts.

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