Getting onto the property ladder has become increasingly challenging, with rising house prices, stricter affordability checks and the need for larger deposits slowing the process for many. As a result, more parents are stepping in to help their children achieve their homeownership goals.
Every family’s situation is unique, and support doesn’t have to just be financial. Allowing your child to live at home longer to increase their savings or simply offering guidance can make a meaningful difference. With the right approach, parents can help without putting their own finances at risk.
In this article, we explore effective ways to support your child, from saving strategies and useful mortgage options to helpful conversations that can help build long-term financial confidence.
Understanding gifted deposits and how they can help
What qualifies as a gifted deposit?
A gifted deposit involves you gifting a sum of money towards your child’s deposit, covering it in full or partially, with no expectation of repayment.
What are the requirements of a gifted deposit?
- Written confirmation
Lenders will typically need you to provide written confirmation that states the funds are a genuine gift and not a loan. This reassures the lender that the money does not need to be repaid and will not create any ongoing pressure for the buyer.
- No involvement in the property
You must not have any legal rights or ownership in the property as this may complicate the lender’s decision to accept the gifted deposit as a gift.
- Evidence of where the money came from
Lenders may request bank statements or similar documents which show the source of the gifted funds. This is a standard part of the checks lenders carry out to ensure both parties are protected and ensure the money has come from a legitimate source.
- Relationship to the buyer
Some lenders will only accept gifted deposits from close family members, such as parents or grandparents, while others are more flexible. A mortgage adviser can help determine which lenders will be most suitable for your personal circumstances.
When are gifted deposits appropriate?
If your child does not yet have the funds for a deposit, then a gifted deposit can make a significant difference by enabling them to step onto the property ladder sooner.
Alternatively, if your child is close to reaching their deposit but needs support reaching lender requirements, then this may also be a beneficial option.
However, a gifted deposit will only be appropriate if you are financially comfortable and able to gift a large sum of money without needing it to be repaid, as this option is not a loan.
Our advisers are here to help and can advise you on the most suitable options for your circumstances and help ensure everything is set up smoothly for both you and your child.
Mortgage products that can help make homeownership easier for your child
If a gifted deposit is not appropriate for your circumstances, there are still ways you can support your child. Certain mortgage products can help you give your child a boost with affordability or enable your child to buy their dream home even if they don’t quite have enough funds, these include:
Joint Borrower Sole Proprietor (JBSP) mortgage
What is a JBSP mortgage?
A JBSP mortgage can be an effective way to boost your child’s affordability without you becoming a legal owner of the property. This involves both you and your child being on the mortgage application, with the lender combining both your incomes to determine what they can borrow.
What are the advantages of a JBSP mortgage?
One of the main advantages of a JBSP mortgage is that you are not added to the property deeds, meaning your child is the sole owner and you avoid any additional stamp duty charges associated with owning more than one home.
As your child’s earnings grow over time, they may later be able to remortgage into their own name, giving them full independence when the time is right and alleviating you from the possibility of having to cover any defaulted payments.
What are the considerations to be aware of?
Lenders will view all borrowers (both you and your child) as equally responsible for mortgage repayments. In practical terms, repayments may be your child’s responsibility, however you would be expected to cover them should your child not.
Additionally, the responsibility and costs of this mortgage will be considered when looking at your own personal needs for borrowing. This is due to this JBSP mortgage being a financial commitment, potentially affecting and impacting your own mortgage needs.
Lastly, as your income is included to boost your child’s affordability, this will also potentially increase your child’s monthly repayments as they are able to take on a larger mortgage. Therefore, it is important to be realistic about how much your child can comfortably afford to repay.
Guarantor mortgage
What is a Guarantor mortgage?
A guarantor mortgage will allow you or a close relative to act as a financial safety net. Instead of contributing income directly towards the mortgage, you agree to cover repayments if your child is ever unable to.
What are the advantages of a Guarantor mortgage?
It can help your child borrow if they have a limited credit history, variable income or a smaller deposit as lenders are provided with additional reassurance from you agreeing to cover any defaulted payments
A guarantor mortgage can also be helpful if your child is a first-time buyer and needs extra support to get their application approved.
What are the considerations to be aware of?
It is important that you are comfortable with this commitment as acting as guarantor means you would be responsible for covering any payments that your child is unable to pay.
Some lenders may also require you to secure the guarantee against your savings or an existing property, while others offer more flexible arrangements.
The level of commitment varies between lenders, but a mortgage adviser can help you determine the most appropriate route for your circumstances.
Joint mortgage
What is a Joint mortgage?
A Joint mortgage involves you and your child applying together and both of you becoming legal owners of the property.
What are the advantages of a Joint mortgage?
As both yours and your child’s incomes are combined during affordability assessments, this can increase the amount you are able to borrow.
It may also improve the chances of your mortgage being approved as higher combined income can help meet lenders’ affordability and stress-testing requirements.
Over time as your child’s financial position strengthens, they may be able to buy out your share or remortgage into their sole name, giving them full independence when the time is right.
What are the considerations to be aware of?
As you and your child will both own the property together, you will be jointly responsible for covering mortgage repayments and any decisions relating to the property.
This option can be appealing for families who are comfortable sharing responsibility and would like a more collaborative approach to homeownership. However, joint mortgages require clear communication and planning, as both you and your child are legally tied to the property and mortgage.
Barclays Family Springboard mortgage
What is a Barclays Family Springboard mortgage?
The family springboard mortgage is a product offered by Barclays bank, which will allow you to support your child without gifting money outright.
This involves you placing a set amount of savings (usually around 10% of the property’s purchase price) into a linked account held by the lender for a specified period, which is typically 5 years.
What are the advantages of a Barclays Family Springboard mortgage?
Your savings act as security for the mortgage, giving the lender confidence to offer your child a mortgage with a smaller deposit or more favourable terms.
After the agreed term and assuming all repayments have been made, your savings will be returned to you with interest, meaning your money will be growing whilst it is locked away.
This option enables you to support your child with their mortgage whilst keeping your own financial plans intact, as your savings remain yours throughout the process and are given back to you at the end of the term.
What are the considerations to be aware of?
Although your savings remain yours throughout the term, you will not be able to access your money under any circumstances until the term ends.
If your child is unable to make repayments and the lender needs to recover the outstanding balance, your savings can be used to cover missed payments or reduce losses.
Barclays Family Springboard mortgage is only available on specific products, meaning you may not be offered the best rates.
Should you release equity to support your child’s first home?
If you are a homeowner, depending on your personal situation, releasing equity may be an appropriate way for you to financially support your child.
Releasing equity involves taking some of the value tied up in your property and receiving it as a lump sum payment. The amount released is added back onto your mortgage, which will usually increase your monthly repayments.
This can be helpful if you want to support your child with their deposit without using your savings. However, your day-to-day finances may be impacted as releasing equity involves remortgaging the property which may impact your mortgage amount and the rates available to you.
Your ability to release equity will be subject to the share of the property that you own, and you will need to complete fresh credit and affordability checks.
For those over the age of 55, a Lifetime mortgage maybe be an option for releasing equity. However, Lifetime mortgages require specialised advice and may not be suitable for everyone. Visit our Equity Release advice page to find out more.
At Cooper Associates Mortgages, we have a team of expert advisers who can help by assessing your circumstances, explaining the options available to you, and outlining any potential long-term implications.
Practical ways to help your child from a younger age
Saving for a deposit is often the biggest challenge for first-time buyers and parental support can make a significant difference. How you help will depend on your personal circumstances, but your guidance alone can make an impact.
Support doesn’t always need to involve money. Some families choose to help in other ways, including:
- Allowing children to live at home longer to save.
- Charging rent that is later put towards their deposit.
- Budgeting tips to help children create consistent saving habits.
However, if you are in the position to help financially, here are a few approaches to consider:
Matched savings
Matched savings can be a great approach in helping your child stay motivated with their savings. They involve contributing to your child’s savings based on what they save themselves, either pound-for-pound or up to a set amount.
Contributions can be made in varying forms, such as monthly payments into a savings account, ISA or LISA. This approach can encourage motivation and offers flexibility to suit your budget and your child’s saving goal.
Shared savings plans
For families who prefer a more collaborative approach, shared saving plans can offer a structured route to building a deposit together. This could involve a joint savings account or saving separately with a shared target and timeline.
Having a clear plan around how much each person contributes and how often can help maintain momentum and open up healthy conversations around budgeting, spending and planning for homeownership.
Financial education
Parents can play a valuable role in building financial awareness early on. Open conversations about money, credit, budgeting, and saving habits can set your child up for long-term success.
Below we discuss several topics that you may find useful to educate your child. These are intended for younger children who
- Building and maintaining a good credit score
A healthy credit score can improve the chances of your child receiving competitive mortgage options, making early financial habits particularly valuable.
Teaching your child the importance of paying bills on time, avoiding unnecessary borrowing, and keeping credit utilisation low can help support their long-term financial health. These habits will help build a positive financial profile, reducing perceived lending risk and typically improving mortgage affordability and approval outcomes.
- Saving strategies
Sharing positive saving habits with your child early on can lead to stronger financial security as they enter adulthood.
Some key points you may find helpful, include:
- Setting goals for short and long-term savings.
- Automating savings so contributions are consistent.
- Utilise Lifetime ISAs (LISA) for government-backed savings.
- Paying into savings before spending.
- How compound interest can grow savings over time.
How can Cooper Associates Mortgages help?
At Cooper Associate Mortgages, our advisers provide tailored, fee-free guidance to families navigating the mortgage process. We take time to understand your situation and suggest options that best support your child’s goals whilst keeping your own financial welfare in mind.
If you are thinking about helping your child buy their first home or would like advice on the best route for them to take, we are here to help. To speak with one of our advisers, get in touch today and book a no-obligation consultation to discover which options may be right for you.
