How Can Parents Help First-Time Buyers?

With house prices remaining high and mortgage affordability rules tighter than ever, many first-time buyers are turning to the ‘Bank of Mum and Dad’ to help them onto the property ladder. In fact, family support has become one of the biggest sources of first-time buyer deposits in the UK.

But how exactly can parents help? And what should families be aware of before making any big decisions? Here’s a breakdown of the most common ways parents can support their children in buying their first home — and the pros and cons of each.

1. Gifting a Deposit

This is one of the most common and effective ways parents support first-time buyers. A gifted deposit is when money is given — not loaned — to help cover the deposit on a property (source: Lloyds Bank).

✔️  Who Can Gift a Deposit

Most lenders prefer the deposit to come from a close relative. This includes:

• Parents, step-parents, or parents-in-law
• Siblings, half-siblings, step-siblings, or brothers and sisters-in-law
• Grandparents or step-grandparents
• Aunts or uncles who are related by blood
• Nieces or nephews
• A partner living with the applicant
• Applicants’ children, stepchildren, sons or daughters-in-law, or adopted children

❌  Who Cannot Gift a Deposit

Some sources are typically not acceptable to lenders:

• Family friends
• Your employer
• A property developer or landlord
• Aunts or uncles who aren’t blood relatives
• Cousins
• Foster or guardian children

Required Documentation

If you’re gifting a deposit, you’ll need to provide documents to satisfy both the lender’s criteria and legal requirements. These typically include:

• A Gifted Deposit Letter confirming the money is a gift, not a loan, and that the giver has no legal interest in the property
• Photo ID (e.g. passport or driving licence) from the person giving the gift
• Proof of funds, such as recent bank statements showing where the gifted money is coming from
• Proof of the source of funds, which may include evidence of savings, the sale of a property, or inheritance
• In some cases, a signed declaration of solvency may also be required

It’s essential to gather this paperwork early to avoid delays during the application process.

Things to Consider

• Lenders must verify where the money is coming from and ensure it meets anti-money laundering (AML) checks.
• Gifts over a certain threshold could have inheritance tax implications if the giver dies within seven years.

2. Acting as a Guarantor

A guarantor mortgage allows a parent to back their child’s mortgage using their own income or assets. This can help the child borrow more or access better terms.

What to consider:

• The guarantor must cover repayments if the buyer falls behind.
• It’s a legally binding commitment and carries financial risk.
• Fewer lenders offer this type of product today, and legal advice is usually required.

3. Joint Borrower, Sole Proprietor Mortgages

These allow parents to be on the mortgage (helping with affordability) without being on the property’s title deeds — often useful to avoid second-home stamp duty charges.

What to consider:

• The parent’s income and age will be factored in.
• Any credit issues or liabilities the parent has may affect the application.
• The property remains solely in the child’s name.

4. Using Family Savings – Offset or Family Assist Mortgages

Specialist mortgages allow parents to support their children by linking savings to the mortgage as a form of security or interest offset.

What to consider:

• Funds may be locked in for several years.
• Can help secure a better mortgage rate or reduce the need for a deposit.
• Parents retain ownership of their savings, unlike a gifted deposit.

5. Offering Practical Support

Even if financial help isn’t possible, parents can still make a difference:

• Letting children live at home while they save for a deposit.
• Helping navigate the mortgage and home-buying process.
• Sharing experience, contacts, and emotional support throughout.

Final Thoughts

Helping a child buy their first home is a significant decision — emotionally and financially. Whether it’s gifting a deposit, going on the mortgage, or exploring family-based mortgage solutions, it’s important to understand all the implications.

At Impact Specialist Finance, we work with parents and buyers to make informed, practical decisions. Our team can help navigate lender requirements, gifted deposit rules, and explore flexible options that suit your family.

Looking to support your child onto the property ladder?

Speak to our specialist team for personalised advice and access to a wide range of family-friendly mortgage solutions.