Updated on 19 May 2015.
There is no single answer to that question; it is a personal decision that will beinfluenced by everything from your approach to parenting and your relationship with your kids, to your financial circumstances.
If you do decide to lend a helping hand, you need to be sure that you are going about it in the right way - to protect your own interests, as well as those of your children.
Getting on the property ladder for the first time is harder and more expensive than ever. Many first time buyers, particularly those with little in the way of a deposit, find it difficult to secure an affordable mortgage deal with which to purchase their new home.
Given the difficulties they face, it is no surprise that around half of all first time buyers get some kind of help with their purchase - more often than not from the Bank of Mum and Dad.
There are a number of options, but the right one for you depends on your circumstances.
The easiest way to help is to give your child enough money for good sized deposit as a gift - in the current mortgage market, that is likely to be around 25% of the value of the property however (though even a 10% deposit will open the door to a broader choice of mortgage deals).
At present, there are no immediate tax implications as you can give as much money as you like to your children tax free.
However, in the future any gift you do give could be subject to inheritance tax if you pass away within 7 years, read our guide Inheritance Tax: The Basics for more details.
If you do not want to simply give your children the money, there are other options:
Your children should not have to pay tax (i.e. income tax) on the money they receive from you as a gift, however, it may impact their eligibility for some means tested benefits should they receive any now or need to claim any in the future.
For more information on lending money to family and friends, and how to make sure you get it back, read this guide .
If you do not have ready cash available you can use your assets (usually your own property or income) to help. In this situation, there are two basic approaches. You can use your home or another asset to raise cash which you then give or loan to your children. Alternatively, you can use your own home or income to help secure a better mortgage deal for your children.
There are two main approaches:
There are a number of options, which boil down to promising to help pay the mortgage once any sale is completed. This approach will help your children to borrow more, since your income will be taken into account as well as theirs. The options here include:
It is important to be clear that there are risks in all of these approaches. For instance, if you simply give money to your children, what happens if you need the money at a later date? Similarly, what happens if you act as a guarantor on your child's mortgage but are not able to make the mortgage payments if required? Like any mortgage, there is always a risk that you could lose your home if things go badly wrong.
Before taking any of the routes described here it is important that you:
If you are still unsure that you can afford to lend a hand, or are uncomfortable with the risks, there are other ways they can buy their first home.
Saving for a deposit is never easy, and one way you could help is by welcoming your kids back into the family home so they can cut down their outgoings. Try these 7 ways to save for a deposit (including moving home) for more tips.
Written by Hannah at money.co.uk
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