Preheat the oven to 325°F (160°C).
Place the sugar and water in a saucepan over medium-high heat, and cook without stirring until the sugar dissolves and gets a caramel color.
Immediately, divide the caramel into 5 ramekins, each ramekin with a capacity of 8 oz (230ml). Rotate the ramekins to coat the bottom and sides with the caramel.
Place the ramekins into a pan.
Pour the milk into the same saucepan you prepared the caramel.
Heat the milk but do not bring it to boil.
In a separate bowl beat the eggs with the sugar and cornstarch. Pour the milk over the egg mixture.
Add the vanilla extract and mix to combine.
Divide the custard between the ramekins.
Pour hot water into the bottom pan to come halfway up the sides of the ramekins.
Bake until slightly golden for about 30-35 minutes.
Cool completely. Then cover and refrigerate for at least a couple of hours or overnight.
Run a knife on the inside edge of the ramekin and invert onto a plate. Enjoy!