How private banking helped this client solve his son’s housing-ladder challenge

When Stephen Thomas* saw that his son and fiancée were struggling to buy their first home, he wanted to help.

In the London market, where the cost of a property for a first-time buyer is nearly double the UK average¹, the challenges of a high interest rate environment are exacerbated. Even with parental support, mortgage rates and availability can be prohibitive for those starting out.

Stephen felt that supporting his child onto that first rung of the housing ladder was an investment in the future. So, he turned to his Investec Private Banker George Lavis for support.

Real challenges for first-time buyers

Stephen’s son, Chris, was a recent graduate, while Rebecca, his fiancée, was still at university. With a limited joint income to service repayments, they were unlikely to be approved for a mortgage based on their income alone without moving out of the capital.

“When you’re so early in your career, it’s hard to meet affordability criteria,” says George. “It’s likely that a loaned or gifted deposit wouldn’t have been enough.”

A fuller appraisal of annual income

For Stephen to act as guarantor, he needed to leverage his existing wealth. The key to his income was profit distributions and as a partner in a successful consultancy, he could confidently factor equity payouts to shareholders into his annual pay.

“Performance-based income streams tend to make up a significant proportion of our clients’ annual income. Whether these payments are regular or irregular, we may be able to include them in our lending calculations. In this case, the evidence of Stephen’s last three partnership distributions was enough for us to confidently approve an 85% LTV mortgage for his son.”

Getting the keys to the door

Chris and Rebecca were able to find a two-bedroom flat within a smart, mid-century block in NW4. Around 30 minutes from the centre and accessible for work and university, it was ideal for their needs.

Stephen fully guaranteed the mortgage, which had a 24-term and included lower repayments for the first three years. Over time, Chris and Rebecca will gradually assume greater responsibility for repayments as they move forward in their careers and build their lives together.

Important information:

1 Source: Office for National Statistics. House Price Index annual tables July 2023. Average dwelling price for 2022 London £475,000, United Kingdom £258,000

*This case study is a representative example based on the services we provide. Names and details have been changed for confidentiality.

Your property may be repossessed if you do not keep up repayments on your mortgage. Investec residential mortgages are only available for residential properties in England or Wales and are primarily available to UK residents and subject to eligibility.