Helping first-timers: final act of parenting or step too far?

TalkingProperty: Is it kind or financially foolish to help your children buy their first home, asks Frances O'Rourke

Reports about a generous couple who had sold their home in an upmarket suburb to give each of their five children €200,000 to help them buy their own houses generated disagreement amongst a group of golfing mothers recently.

The couple reportedly had sold the family home for around €2 million and bought a new smaller house for €750,000 - leaving themselves relatively little for their own future.

One mother thought this showed how generous they were; another felt they had put their own future financial security at risk.

Another felt strongly that the most children should be given was money for a deposit.

They would all have been shocked at the news that one father splashed out large deposits on not one, or two, but five apartments at Beacon Court in Sandyford last week for each of his five children.

The arrival of the 100 per cent mortgage has gotten many parents off the hook when faced with the question of whether or not to help their adult children buy their first home: there has been a definite fall in the number of parents giving financial help since these mortgages were introduced last summer, according to lenders like Olive Moran, head of marketing with Bank of Ireland Mortgages and Dara Deering, head of mortgages at the EBS.

But the question of whether to help your adult children buy their first home is still a lively topic between middle-aged, middle class parents at dinner parties and on golf courses.

How much help parents are willing to give children depends, of course, on income: wealthy people, now as always, look for ways of passing on that wealth and that can include selling the valuable family home - or transferring it into the children's name - sooner rather than later.

But nowadays, a whole generation of forty and fiftysomething Dubliners on moderate incomes living in modest semis worth massively more than anyone could have anticipated feel some pressure to cash in on their good fortune to help their children out.

Mortgage brokers, lenders and estate agents all report that stories of over-generous parents and grasping children asking mum and dad to sell or remortgage the family home to provide them with cash for their first house are exaggerated.

The EBS got a lot of flak for an ad it ran several years ago for a financial product called Family First, which featured a son putting the squeeze on dear-old-dad to take a loan on the family home to help him out.

The product, which enables a parent to take out a loan with no repayments due for three years - after which it's assumed the child will take responsibility for them - is still part of the building society's offers to first-time buyers, says Dara Deering - and there are still parents who want to take advantage of it.

But should they? Do they need to? Research carried out last summer by the Permanent TSB/ESRI showed that about 20 per cent of first-time buyers (FTBs) get a gift from a parent or relative for their first home purchase, with the average gift being €15,000. (This means, of course, that 80 per cent manage on their own, a heartening statistic proving that, yes, it can be done. The research showed these FTBs managed to save up to €23,000 themselves.)

Fairly typical of the kind-but-pragmatic parents willing to help out is one couple, who have decided to give each of their three children €10,000 towards the cost of buying their first home.

They have already given their eldest twentysomething the loan, but she had to save for the deposit on the south docklands apartment she now owns, where her mortgage repayments are covered by rent. Their three children still live at home in an upmarket south Dublin suburb, and all pay modest rent, which their parents quietly earmark for their children's future.

Another mother is pleased her son has bought a property without help from his parents, which he pays for by renting it out. But they do help indirectly by not looking for rent from him, a fairly hefty (and often underappreciated) subsidy.

Some parents help by acting as a guarantor for a loan; some in their mid-fifties extend their own mortgage to get cash for the kids, perhaps to provide a lump sum of around €30,000 for a deposit. Others may apply with their child for a "joint mortgage, single deeds", where the parent and child take out the mortgage together, but the child holds the deeds.

Generally the idea is that the child makes the repayments but, of course, both parties are liable for missed payments, which is why most lenders will advise parents to get independent legal advice before going down this road.

Anecdotal evidence suggests that selling your own house to give money to help your children is pretty rare.

But the debate goes on: many parents feel very strongly that children should stand on their own two feet financially by their twenties.

Others may agree with the Bank of Ireland's Olive Moran, who did some research with the bank's FTBs.

She found that where parents helped out, it was usually a gift, not a loan. But it's pretty much the final push out of the nest.

"Many parents feel such a gift is the final parenting act - they've fed their children, educated them and now helped them buy their first home - after that, they're definitely on their own."