26 Jun Borrowing From The Bank of Mum & Dad
Getting on the property ladder in 2025 isn’t easy; but you’re not alone in the struggle. With house prices remaining high and the cost of living squeezing every corner of your budget, saving for a deposit feels out of reach for many. That’s why more and more first-time buyers in Northamptonshire are turning to a familiar and generous lender: The Bank of Mum & Dad.
Whether it’s a lump sum towards a deposit, financial backing for a mortgage, or even a parent acting as a guarantor, family support is playing a bigger role in homeownership than ever before. In fact, if the Bank of Mum & Dad were a financial institution, it would be one of the largest lenders in the UK housing market!
But if you’re thinking about giving or receiving this kind of help, it’s important to understand how it works and how to do it the right way.
One of the most common ways parents (or even grandparents, aunts, uncles, and close family friends) help is by gifting a deposit. And here’s the good news: a gifted deposit is completely tax-free – provided it’s a true gift with no expectation of repayment.
In the UK, there’s currently no tax payable by the buyer on a gifted deposit, and no immediate tax payable by the person giving the gift either, so long as they live for at least seven years after giving it. This means many families can transfer wealth to the next generation early, helping their children get a foot on the ladder without falling foul of HMRC (We always recommend you seek independent tax advice in this regard).
But here’s where you need to be careful: lenders will need clear documentation confirming that the money is a gift and not a loan. This includes a signed “gifted deposit letter” that confirms the giver won’t expect the money back or take a share in the property. It’s also important for both parties to be clear on what this means emotionally and financially.
If you’re a parent thinking of helping, make sure you’re doing so in a way that won’t affect your own financial security. And if you’re the buyer, ensure you’re honest with your mortgage broker and lender as transparency now will avoid complications later.
Many lenders now accept and even encourage family assistance, and there are specialist products designed for these situations, including family offset mortgages, joint borrower sole proprietor loans, and more.
So whether you’re a first-time buyer struggling with your deposit, or a parent eager to help your child take their first steps into homeownership, it’s all about knowing your options — and structuring the support correctly.
We can guide you through it all, lender requirements, and the best product for your family’s situation.
Book in a call with our broker team here: https://calendly.com/d/crcr-w23-hbv
The Bank of Mum & Dad doesn’t need to be complicated — just carefully planned. Let’s make homeownership happen, together.
(WYKE FINANCIAL ARE NOT TAX ADVISORS PLEASE SEEK INDEPENDENT HELP IN THIS REAGRD)
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