Back

The Bank of Mum and Dad

May 29, 2025
The Bank Of Mum & Dad
If you’ve been dreaming of buying your first home but are struggling to get the cash together, don’t worry – you’re not alone. 
 
It’s becoming increasingly difficult to get on the property ladder, so it’s no surprise that many homebuyers are turning to their families and the ‘Bank of Mum and Dad’ for help. Explore our guide to find out more.
 

What is the Bank of Mum and Dad?

The “Bank of Mum and Dad” refers to financial help from parents (or grandparents) to support their children in buying a home. This often comes as a gifted deposit, but it can also be an informal loan, regular financial support, or acting as a guarantor on a mortgage.

 

In some cases, parents use their own savings or property as security through options like springboard mortgages, helping their children borrow more than they could on their own.
 
 

Types of financial help from the Bank of Mum and Dad

Gifted deposits 

Gifted deposits refer to the money given to a homebuyer, often by a family member, to help them buy a house. They can either be a contribution towards the mortgage deposit or equate to the whole deposit. The person gifting the money does not gain any ownership or legal ties to the home. 
  

Bank of Mum and Dad mortgages 

Guarantor mortgages 

If your parents cannot help with your deposit, they could act as guarantors instead. This means that if you are unable to make the mortgage payments, your parents guarantee to pick up the bill.
 
However, it’s worth remembering that your parents would be providing additional security, which will be at risk if you default on the mortgage. Whilst parents are keen to assist their children in getting on the property ladder, it shouldn’t necessarily be done at the expense of their financial security or standard of living.
 

Joint mortgages

You could also consider a joint mortgage with your parents. 
 
A joint mortgage is a loan that two or more people take out to put towards a property. Both people will be jointly responsible for the monthly repayments and share ownership of the house. 
 
This means that you, the homebuyer, could borrow a larger sum than you would be able to on your own. 
 

Family offset mortgages 

Family offset mortgages are when parents use their savings to help their children or grandchildren get onto the property ladder. 
 
You, the homebuyer, will need to create a linked savings account that includes your parents' financial contribution and your own. The balances in the linked account are then used to ‘offset’ the balance of your mortgage. It’s a great way to significantly reduce your mortgage’s interest, as what you pay will be calculated on the reduced balance. 
 
The homebuyer will retain ownership of the money they contributed to the deposit, and the parent's savings will remain in their name and can revert back to them at a later date. 
 

Joint borrower sole proprietor (JBSP) mortgages 

Finally, you could consider a JBSP mortgage. This allows multiple people to make payments on a property, but only one person is named as the owner of the property deeds. 
 
It’s beneficial for first-time buyers because lenders will consider each applicant's income as a collective when assessing how much they can lend. As a result, the homebuyer will likely be able to borrow a larger sum of money and will also receive help with repayments. 

 

What are the advantages and disadvantages of the bank of mum and dad? 

Advantages of the Bank of Mum and Dad

If you’re lucky enough to receive support from family when buying a home, there are several potential benefits:
 
Better mortgage approval chances: Having a larger deposit—thanks to family help—can improve your loan-to-value (LTV) ratio. This makes you more appealing to lenders, as it reduces the amount you need to borrow and signals lower risk.
 
Access to lower interest rates: A lower LTV often means you qualify for more competitive mortgage deals. This can lead to reduced monthly repayments and save you thousands over the life of the mortgage.
 
More property and mortgage options: With a bigger deposit, you may be able to afford homes in better areas or higher price brackets, and you’ll likely have access to a wider range of mortgage products.
 

Disadvantages of the Bank of Mum and Dad

While family support can be incredibly helpful, there are also some downsides to be aware of:
 
Tricky family conversations: Money can be a sensitive topic. Discussing how much help is available—or dividing support fairly between siblings—can sometimes cause tension or discomfort.
 
Possible impact on mortgage applications: If the support is a loan rather than a gift, some lenders may treat it as a financial commitment. This can reduce the amount you’re allowed to borrow.
 
Added financial pressure: If you’re expected to repay the money later, you’re taking on extra debt in addition to your mortgage, which can stretch your budget and affect long-term financial plans.
 
 
 

What Are the Hidden Costs of the Bank of Mum and Dad?

Family support can be a lifeline when buying a home, but it’s important to consider the less obvious downsides. A large gift or loan could strain your donor's finances, especially if it affects their savings or retirement plans.
 
It’s also crucial to be clear on whether the money is a gift or a loan. Misunderstandings can lead to tension later on, so make sure expectations are agreed in writing.
 
Finally, don’t overlook potential tax implications. Large gifts may impact inheritance tax if the giver dies within seven years, so getting legal advice is a smart move.
  


Ready to become a homeowner? Explore our fantastic range of new homes across the UK, with unique offers to help you move. 
 
Call or visit our Sales Advisers at your nearest development to find out more. 
 

Related Articles