What is the Bank of Family?
Getting onto the property ladder has never been easy, and with rising house prices and the cost of living continuing to squeeze savings, many first-time buyers are turning to family for a helping hand.
According to recent research, gifts and loans from the so-called “Bank of Mum and Dad” totalled around £9.4 billion in 2023. If it were a real bank, it would be one of the largest in the UK! But these days, it’s more accurate to call it the Bank of Family, as support now often comes from parents, grandparents, and even siblings.
At Appletree, we see many families helping younger generations buy their first home, and it’s not just about cash gifts for deposits. There are several ways family can get involved, depending on what works best for everyone.
Helping with the deposit
The most common way family members help is by gifting or lending money towards a deposit. For many first-time buyers, this makes all the difference, whether it’s enough to secure that first home or to move into a lower loan-to-value bracket and access better interest rates.
With rent and living costs remaining high, saving for a deposit can be a challenge. That’s why family support is becoming more common. According to Legal & General, around 68% of the Bank of Family’s total support (roughly £5.6 billion) goes towards deposits.
Lenders will usually allow a gifted or loaned deposit, but they will ask for written confirmation of where the money has come from and whether it needs to be repaid. If it’s a gift, the family member will need to confirm that they don’t expect the money back.
Joint Borrower, Sole Proprietor (JBSP) mortgages
A Joint Borrower, Sole Proprietor mortgage, sometimes called an Income Booster mortgage, is another way for family members to help. This option allows a parent, relative or even a friend to go on the mortgage to boost affordability, without being named on the property deeds.
In simple terms, you can combine incomes to strengthen the application, but only one person legally owns the home. This can be useful for first-time buyers who earn enough to cover repayments but need an income boost to meet lender requirements.
However, all borrowers are jointly responsible for the repayments, so it’s important to be confident everyone understands their role. These mortgages aren’t available from every lender, but an adviser can help identify which ones might suit your situation.
Guarantor mortgages
A guarantor mortgage works slightly differently. In this case, a parent or close family member agrees to guarantee the mortgage, meaning they’ll cover repayments if the borrower can’t.
The guarantor doesn’t own any part of the property, but they may need to offer some security, such as savings or equity in their own home, to give the lender extra reassurance.
This can be a great way for families to support first-time buyers, but it’s a big financial commitment, so it’s important to get advice and understand the full picture before going ahead.
Why speaking to an adviser helps
There’s no single “right way” for families to help, every situation is different. Whether it’s a gifted deposit, a joint mortgage or a guarantor arrangement, each comes with its own rules and responsibilities.
That’s where professional mortgage advice makes all the difference. At Appletree, we can look at all the available options, explain how each works, and help you and your family make an informed choice that protects everyone involved.
If you’re hoping to buy your first home soon and would like to explore your options, we’d be happy to talk you through what’s possible. Please get in touch for a chat.
Appletree Financial Services
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