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3 ways to help your family buy a home — and the risks to watch out for
Sam covers personal finance topics, from the best savings rates to the reasons mortgage lenders say no. He enjoys crunching the numbers to help consumers get ahead.
Half of all first‑time buyers received direct financial support from family members to get onto the property ladder in 2025, according to the latest research from global real estate agency Savills.
With the average 10% deposit costing first-time buyers £23,000 - or £50,000 in London (based on Land Registry data), it's no wonder family members are trying to help buyers make their first house purchase.
But it's not just first-time buyers that may need help. The average cost of a house is now far higher than a flat, making it increasingly difficult for homeowners to make the second step in their housing journey.
Whether you're looking to help your child make their next move or first, we've outlined the key ways you can offer financial support and the important considerations to weigh up before doing so.
1. Offer to boost their deposit
The obvious option if you would like to help a family member get onto the property ladder, or move up it, is to offer them money towards a deposit.
Even if a buyer already has 5% or 10% to put down, increasing the size of the deposit can help buyers, as lenders offer better deals to borrowers with smaller loans. A larger deposit also reduces the risk of negative equity if the property market takes a turn and the home is worth less than what they borrowed.
What to consider: Decide whether you want the money you offer to be a gift or a loan. Outright gifts remain the most common form of family support, with twice as many buyers receiving them as those who are given family loans, according to Savills research.
If you're planning on gifting a family member money for a deposit it is important to document it properly, otherwise it can raise red flags during the mortgage application process. Lenders will want to ensure the money is a gift, rather than a loan, because the latter could affect affordability calculations. This can be done by providing written confirmation that the money is a gift.
Will I pay tax on a gifted deposit?
You can gift £3,000 in a tax year without incurring tax. This rises to £3,000 if no gift was made in the previous year. There are also additional exemptions available for smaller gifts and gifts in consideration of marriage by a parent.
If tax is going to be incurred when gifting a deposit it will be in the form of inheritance tax (IHT). If the person gifting the funds does not survive seven years from the date of the gift, the amount gifted will fall into the taxable estate on death.
However, when calculating the IHT due on an individual’s estate, the IHT nil rate band of £325,000 is allocated first to lifetime gifts made in the previous seven years before death. In addition, the oldest gift is allocated first.
This means that if the only gift made by the person who passed was a £25,000 house deposit made six years before they died, that gift would not be taxed. Instead, it would utilise the first £25,000 of the parents' nil rate band.
- Find out more: Inheritance tax: thresholds, rates and who pays
2. Keep your money with a guarantor mortgage
Family members can use their own wealth to help others get onto the property ladder, without gifting it to them directly. For example, a guarantor mortgage uses your savings or a property as security for the loan.
One example of this type of mortgage product is the Family Springboard Mortgage, offered by Barclays. This product allows buyers to purchase without a deposit. Instead, a family member will deposit 10% of the property's value into a special savings account called Helpful Start. This will be held for five years and then released back, with interest added, providing all mortgage payments are made.
Barclays asks that the family member providing the deposit get independent legal advice to ensure they fully understand the implications of putting money into the Helpful Start account. If any mortgage payments are missed, then the lender will hold onto your money for a longer period of time.
What to consider: If the lender had to repossess and sell the property and received less than what was still owed on the mortgage, they could recoup the difference from your savings. It is also important to note that the rate for this type of savings account is usually lower than you'd get with other savings products.
- Find out more: mortgage types explained
3. Boost borrowing power with a JBSP mortgage
Joint Borrower Sole Proprietor (JBSP) mortgages are another option for parents wanting to help their children get onto the property ladder. By combining incomes, a buyer can potentially qualify for a larger loan.
A JBSP will still require a deposit. As a result, guarantor mortgages are better suited if a buyer is struggling to save for a deposit, while a JBSP product is helpful if the buyer needs help accessing a larger mortgage.
A key feature of this mortgage product is that, while the parent and child are both named on the mortgage, only the child's name will be on the property's deeds, meaning the parent will not incur stamp duty.
Ultimately, this type of mortgage is aimed at helping borrowers purchase a property, with the expectation that they will shift to a standard residential mortgage once sufficient equity is built up over time.
What to consider: Older parents may struggle to get accepted for this type of loan, because their income is often a key element of the affordability calculations. Some lenders will only accept an application where the family member is working, as income typical falls in retirement.
- Find out more: How can parents help first-time buyers?
