Lee Shortt thought she and her husband were doing the right thing when they bought two flats five years ago near the family home in Kew for their sons.
But now, times have changed and the two boys are keen to put down roots in Hackney – one of London’s most sought-after boroughs.
Ms Shortt – who is now nearing retirement – had viewed the two buy-to-let properties as family investments. Together, they cost £900,000 and there is still a £500,000 debt on them.
Neither are turning much of a profit, with one seeing its monthly mortgage cost shoot up from £500 to £1,400 last year.
The mother-of-two recently sold the family home and is renting in the Thames-side village of Barnes with her husband. They have around £2m in a National Savings account earning 3.6pc in interest.
Their sons, aged 27 and 31, are yet to get on the property ladder. Both are single, and so Ms Shortt is wary they will need big deposits in order to buy.
She wants to help them, but she also wants to know whether she and her husband can eventually retire. The two don’t have huge pensions, having cashed in over the years to pay school fees.
While there are no immediate plans to retire – Ms Shortt describes herself as a “workaholic” and her husband still works six days a week – they are keen to settle down somewhere in the short term and stop renting.
She said: “Lots of our sons’ friends still live at home. I was married at 26, I was gone – and I never thought I wouldn’t be able to buy.
“One of our sons is on £50,000, but he still can’t afford to buy on his own. Neither of them want to live in Kew, where the buy-to-lets are, they want to live in Dalston. Hackney was a war zone in my day.
“So we’re stuck with these two buy-to-lets. We don’t know what to do with them.
“We’ve let them for the past five years. We could pay off the buy-to-let mortgages, but this does eat into our capital. We could, alternatively, keep one flat and then have a second home outside of London.”
Nick Mendes, mortgage broker at John Charcol
There are a range of options to help support first-time buyers onto the property ladder which are designed to overcome deposit and borrowing barriers.
Joint-borrower, sole-proprietor is one option. It’s where two or more people that take out a mortgage are all considered borrowers, but aren’t all on the title deeds of the property.
When a bank or mortgage provider takes the buyer’s and the supporting applicant’s credit and income into consideration, this can improve the overall affordability of the application and allow them to borrow more.
Also, fear not – if the guarantor or joint borrower supporting the application already owns a property, additional stamp duty won’t be charged as they’re not going on the title deeds and won’t have any ownership rights.
