First-Time Buyers UK 2026 — Deposits, Mortgages, Schemes and Buying CostsHelping Your Child Buy a House UK — Financial Options Explained
Ways to help your child get on the property ladder in the UK. Gifting a deposit, guarantor mortgages, joint ownership, and the financial implications.
Property prices make it tough for young people to buy homes. Here’s how parents can help, and the financial implications of each approach.
Ways to Help
| Method | How It Works | Risk Level |
|---|
| Gift a deposit | Give cash, no repayment | Low (your risk) |
| Loan a deposit | Lend money, expect repayment | Medium |
| Guarantor mortgage | Support their mortgage | Medium-High |
| Joint mortgage | Buy together | High |
| Family offset mortgage | Use your savings | Low-Medium |
| Help with costs | Pay fees not deposit | Low |
Gifting a Deposit
How It Works
You give your child money outright — no repayment expected.
Lender Requirements
| Requirement | Details |
|---|
| Gifted deposit letter | Signed by donor |
| Confirm relationship | Family member |
| No repayment | Must be unconditional gift |
| Source of funds | May need to prove origin |
| AML checks | Anti-money laundering |
Sample Gift Letter Contents
| Must Include |
|---|
| Donor’s name and address |
| Recipient’s name |
| Amount being gifted |
| Relationship to recipient |
| Statement: “This is a gift with no expectation of repayment” |
| Statement: “I have no interest in the property” |
| Donor’s signature and date |
Tax Implications: Inheritance Tax
| Amount | IHT Implication |
|---|
| Within annual exemption (£3,000) | No IHT |
| Within unused last year’s exemption | No IHT (£6,000 total if unused) |
| Larger gifts | Part of 7-year rule |
The 7-Year Rule
| When You Die After Gift | IHT Payable |
|---|
| Within 3 years | 40% on excess over nil-rate band |
| 3-4 years | 32% (taper relief) |
| 4-5 years | 24% |
| 5-6 years | 16% |
| 6-7 years | 8% |
| After 7 years | None |
Example: Gift £100,000, die after 5 years. This could reduce IHT vs leaving it in your estate, depending on your total estate value.
Gifting: Considerations
| Think About | Details |
|---|
| Fair to siblings? | May cause family tension |
| Your own security | Can you afford it? |
| Their relationship | What if they split up? |
| Ongoing help expected? | Set boundaries |
Loaning a Deposit
How It Works
You lend money to your child with expectation of repayment.
Lender Issues with Loans
| Problem | Why |
|---|
| Counted as debt | Reduces borrowing capacity |
| Must declare | Can’t hide from lender |
| Interest-free loan | Still counts |
| May affect affordability | Lower mortgage offered |
Most mortgage lenders prefer gifts over loans because loans represent additional debt.
If proceeding with a loan:
| Include | Purpose |
|---|
| Amount loaned | Clear figure |
| Interest rate (if any) | Often 0% |
| Repayment terms | When and how |
| What happens on sale | Repaid from proceeds? |
| Legal advice | Both parties |
Guarantor Mortgages
Types of Guarantor Arrangements
| Type | How It Works |
|---|
| Income guarantor | Your income supplements child’s for affordability |
| Savings guarantor | Your savings held as security |
| Property guarantor | Your property as additional security |
| Family springboard | Savings held, returned after set period |
Family Springboard Mortgages
| Feature | Details |
|---|
| How it works | Your savings (typically 10%) held in linked account |
| Duration | Usually 5 years |
| Your savings | Earn interest, returned after 5 years if no missed payments |
| Risk | Savings used if they default |
| Examples | Barclays, Lloyds, others |
Income Guarantor
| Feature | Details |
|---|
| How it works | Your income added to child’s for affordability |
| Your liability | Cover payments if they can’t |
| Duration | Usually until LTV drops or remortgage |
| Age limits | Usually max 70-75 at end of mortgage |
Risks of Being a Guarantor
| Risk | Consequence |
|---|
| Missed payments | You must pay |
| Repossession | Rarely, but possible |
| Credit score impact | Linked to mortgage |
| Own borrowing | May affect your capacity |
Only guarantee what you can afford to lose.
Joint Mortgages with Parents
How It Works
You and your child are both named on the mortgage and property (or just mortgage).
Joint Borrower, Sole Proprietor (JBSP)
| Feature | Details |
|---|
| Who’s on mortgage | Both of you |
| Who owns property | Child only |
| Stamp duty | First-time buyer rates apply |
| Your liability | Full mortgage responsibility |
Benefits
| Benefit | Details |
|---|
| Higher borrowing | Combined income |
| Better rates | Lower LTV possible |
| First-time buyer benefits | If JBSP, child gets these |
Risks
| Risk | Details |
|---|
| Second property rules | May affect your tax position |
| Mortgage commitment | On your credit file |
| Own borrowing | Reduced capacity |
| If you need care | This asset may be considered |
Family Offset Mortgages
How It Works
Your savings are “offset” against your child’s mortgage, reducing their interest.
| Example | Calculation |
|---|
| Child’s mortgage | £200,000 |
| Your offsetting savings | £50,000 |
| Interest charged on | £150,000 |
Key Features
| Feature | Details |
|---|
| Your savings | Remain yours |
| Accessibility | Usually can withdraw |
| Interest earned | None (offset instead) |
| Risk | Low — your money stays yours |
Best of both worlds: Helps child, keeps your money.
Helping with Other Costs
Non-Deposit Ways to Help
| Cost | Typical Amount |
|---|
| Solicitor fees | £1,500-2,500 |
| Survey | £400-800 |
| Stamp duty | Varies |
| Moving costs | £1,000-3,000 |
| Initial furnishing | Variable |
This help doesn’t affect the mortgage application the same way deposit help does.
Before You Help: Questions to Ask
About Your Finances
| Question | Why It Matters |
|---|
| Can I afford to give this money? | Don’t risk your security |
| Will I need this money back? | If yes, lender counts as debt |
| How will this affect my retirement? | Don’t delay your own plans |
| What about my other children? | Fairness matters |
About the Purchase
| Question | Why It Matters |
|---|
| Is this a sensible purchase? | Don’t fund a mistake |
| Can they afford the mortgage? | Without you eventually |
| What if they break up? | Money may be lost |
| Is the property good value? | Not overpaying |
About Them
| Question | Why It Matters |
|---|
| Are they financially responsible? | Track record |
| Will this create dependency? | Boundaries |
| Have they tried without help? | Effort matters |
| Do they understand the commitment? | Homeownership responsibilities |
Protecting Your Gift
If They’re in a Relationship
| Option | Protection |
|---|
| Deed of Trust | Specifies who contributed what |
| Tenants in Common | Unequal shares recorded |
| Just in child’s name | Partner has no automatic share |
| Cohabitation agreement | Clarifies if they split |
If They Later Divorce
| Situation | Likely Outcome |
|---|
| Gift with no conditions | May be split as marital asset |
| Gift documented carefully | Strengthens child’s position |
| Loan with agreement | Clearer position in court |
Documentation helps but courts focus on fairness in divorce.
Comparison: Which Method Works Best?
| Your Situation | Best Approach |
|---|
| Can afford outright gift | Gift (cleanest) |
| Want money back eventually | Formal loan (but affects mortgage) |
| Want to help but keep money | Family offset or springboard |
| Child can’t qualify alone | Joint mortgage or guarantor |
| Want to help with costs | Pay fees directly |
Summary Checklist
Before helping your child buy a house:
Helping children onto the property ladder is generous, but do it responsibly without risking your own financial security.
aliases:
- /mortgages/first-time-buyers/helping-child-buy-house/
Your home may be repossessed if you do not keep up repayments on your mortgage. PocketWise provides information and guidance — we do not offer financial advice. Seek independent mortgage advice before making decisions about borrowing.