How can the Bank of Family support first time buyers?

How can the Bank of Family support first time buyers?

With gifts and loans from the Bank of Mum and Dad totalling a whopping £9.4bn in 2023, it would be one of the UK’s biggest if it was a real bank or lender. Given the clear affordability challenges still facing house buyers – particularly first timers – that figure only looks to set to increase.

Whether it’s the Bank of Mum and Dad, Nan and Grandad or the Bank of Family, first-time buyers (FTBs) up and down the country continue to call on their loved ones for that extra support. While the most obvious method is by helping to fund deposits, there is actually a number of ways a parent or family member can help make buying a house a reality.

Deposits

Let’s start with the most obvious one. Through a gift or a loan from family, FTBs are able to boost their deposits. This can help with just getting onto the ladder, or perhaps squeaking into a better loan-to-value bracket – helping to unlock more desirable interest rates.

Given the cost pressures, high inflation and ever-higher rents that have limited the ability of renters to save up for a deposit, it’s not hard to see why this support is needed. According to research by L&G, around 68% of the total value of the Bank of Family goes towards deposits, equalling £5.6bn.

Most lenders will allow you to use a gift or loan to help make up or cover a mortgage deposit. You will be asked to provide proof that it is indeed a gift, or if a loan, how this will be repaid.

Joint Borrower, Sole Proprietor (JBSP)

Beyond the gifting or loaning of money, family members can also support their loved ones through a joint borrower, sole proprietor mortgage. Also known as an Income Booster mortgage, this is where multiple people come together to buy a property, but just one person owns the home.

This can be up to four people using their combined income and can include parents, but also siblings, other family members or even friends in some cases. There’s no expectation for the other parties to commit towards the deposit, but they will be liable if the property owner is unable to make the repayments.

It may not be a product that every lender offers, but there are certainly options available. There’s much to consider too, particularly given the joint liability, making a mortgage adviser a good person to speak to if you’re considering a JBSP mortgage.

 Guarantor

A similar proposition is a guarantor mortgage, where another person – typically a parent of family member – takes responsibility for the mortgage payments if you’re unable to pay. Similarly, they won’t own a share of the property or be named on the deeds.

They may however be expected to offer up some collateral to give the lender that extra protection should you fail to keep up with the payments. This can be in the form of savings, or by securing the mortgage against their own property.

As the famous saying goes, terms and conditions apply – as do certain exclusions depending on the lender. Like JBSP, it’s a big decision to make – especially for the guarantor – but a mortgage adviser is best placed to run through the all the options.

Speak to an adviser

While it is certainly tougher for first-time buyers to get onto the ladder, there is a wealth of options available to try and support that first step. That is definitely the case if Mum and Dad or wider family members are able to provide some assistance, either through a gift or loan, or through supporting your mortgage application.

As mortgage advice experts, we can help you explore all the options available to you and if you’re not quite in a position to buy, we can help put the steps in place to help you get there.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Approved by The Openwork Partnership on 07/04/25.