Q - My son wants to buy his first house with his girlfriend who he has only been in a relationship with for a few months. My husband and I want to help him, either by way of a loan or a cash gift. However, I am concerned that if things go wrong in the future, his girlfriend may be entitled to some of the money that we have put into the purchase of the property. What are my options in terms of lending/giving my son some money and how can I protect my money from the hands of his girlfriend?

If you intend to lend money to your son either to help with the deposit for the house or to help with mortgage repayments, there are a number of options you should consider:

1. Formal mortgage or secured loan agreement - this will officially record the terms of the loan and when repayment is due. This might be triggered by a change in your son and his girlfriend's circumstances for example; a clause could be drafted which said that in the event that the property was sold, the whole mortgage/loan becomes immediately repayable to you.

2. Declaration of Trust – this will be relevant if you make a capital contribution to the purchase price. The declaration should set out the contributions that each person has made to the purchase of the property, the proportions in which the parties own the property and what happens in the event of someone wishing to move on, including the potential breakdown of the relationship.

3. Guarantor - As a parent, you may consider becoming a guarantor on a mortgage. This could help boost the amount your child can borrow as the bank knows that it can turn to you in the event that your son defaults on his payments. This does mean that, should they later become unable to pay the mortgage, you will be liable for doing so and the lender can chase you for the money.

As for your son, he should enter into a Cohabitation Agreement with his girlfriend. He needs to be aware that people who live together do not have the same rights in law as married couples on breakdown of the relationship. An agreement clearly sets out the intentions of the parties and can regulate matters such as ownership and division of land, property and money. It can detail how debts will be dealt with and how day to day living expenses will be met.

Overall, ensure your financial position is secure now and in the future before you consider lending or giving money to your son. There will be tax implications involved depending on which option you choose and legal advice is always recommended to ensure that any document is drawn up and executed correctly. Finally, anyone who obtains interest in a property should considering drawing up or amending their Will to ensure it is clear where their interest passes on death.

Our team of specialist lawyers at Howes Percival LLP can help you make the right decision for you. If you wish to discuss any of these matters further, please do not hesitate to contact our Private Client Team on 01604 230400 or email sarah.banner@howespercival.com or our Family Team on 0116 247 3564 or email justine.flack@howespercival.com