How parents can help their child buy their first home

Key takeaways

• The average first-time buyer is now 32, with the average first-time buyer deposit now sitting at £42,324. It’s no wonder family support is used to help over half of first-time buyers get on the ladder.
• You can help without handing over cash: options include using your savings as security, releasing equity from your home, or boosting your child's borrowing power with your income as a guarantor.
• Tax and fairness matter: Financial gifts over £3,000 may have inheritance tax implications, and it's worth thinking about how support for one child affects siblings

Buying a home has become increasingly challenging for younger people. Our research shows that, assuming an aspiring home buyer saves 10% of their income each month, it would take 10.7 years to save the average deposit.For many first-time buyers in the UK, the Bank of Mum and Dad is becoming their only way onto the ladder - helping out over half of first-time buyers. 

But for many families, finding large amounts of cash to give to the next generation isn't always possible. And with the cost of living on the rise, many parents will be nervous about giving their savings away.

Luckily, helping a child buy a home doesn't have to mean handing over a lump sum. 

In fact, we found that through guarantor mortgages (as well as other schemes like shared ownership), first-time buyers were able to increase their borrowing potential by £88,399, lifting maximum budgets from £271,484 to £390,817.

Let’s run through some of theoptions available to parents looking to help their children buy their first home.

1. Gifting a deposit 

Gifting your child a deposit can be one of the most straightforward ways to help them onto the ladder, if you can afford it. Having a larger deposit not only means your child can borrow less to cover the property price, but their mortgage interest rates may be lower. 

Most mortgage lenders are happy for buyers to use gifted deposits for their property purchases, but there may be additional paperwork to complete. For example, the lender may ask you to confirm:

• How much is being gifted
• The source of the funds
• How are you related to the mortgage applicant

They might also ask you to declare:

• That you have no financial interest in the property
• If the money is a loan, it doesn’t need to be repaid until the property is sold

2. Use your savings as security

A family springboard mortgage can be particularly useful if your child has a small deposit or doesn’t have any money saved at all. This type of mortgage lets you use your savings to help your child buy their first home, without waving goodbye to your cash forever.

Instead, you’ll deposit 10% of the property price in a special savings account held by the lender for a set time period, usually 3-5 years. This money will be used as security in case the child has any difficulties making their mortgage payments.

You’ll earn interest on your savings too, so if everything goes as planned, not only will you have helped your child onto the property ladder, you’ll have benefited too. But keep in mind that if your child doesn’t keep up with their repayments, you may not get your savings back until they have caught up, or the lender may use some of your savings to pay their arrears.

There are a few high street lenders that offer springboard mortgages. As specialists in guarantor mortgages, our team of mortgage experts can also help you find the best mortgage option for you and your child.

3. Unlock equity from your own home

If you’re a homeowner, it may be possible to use your property to help your child buy a house. This can often involve releasing equity and using it to provide a gifted deposit for your son or daughter’s first home.

If your child is unable to save a big enough deposit and you don’t have enough cash savings to help them (or don’t wish to use them), unlocking money from your property can be a great way to help them get on the ladder. At Tembo, we call this a Deposit Boost.

Not only can a Deposit Boost help young adults get on the ladder sooner, but with a larger deposit, they may also have access to lower interest rates. A few percentage points might not seem like much, but it can add up to thousands of pounds over the course of a mortgage.

It could also help you reduce your inheritance tax liability down the line. For tax-related questions, it's always worth speaking to an independent tax adviser who can look at your full financial picture.

It works by using a small mortgage release a portion of the equity you’ve built up in your home. Once the money has been taken out of your property, you can give it to your child for their house deposit. They’ll use this money (along with any savings of their own) to apply for a mortgage.

Keep in mind that you will need to pass an affordability assessment for the mortgage on your property, and keep up to date with your mortgage repayments.

Read more: What are the benefits of an early inheritance?

4. Using your income to help your child

If you use your income to help your child buy a house, this is usually referred to as a Joint Borrower, Sole Proprietor (JBSP) mortgage, but at Tembo, we call this an Income Boost.

An Income Boost lets the borrower add a friend or family member onto the mortgage, without adding them to the property itself. You will be a joint borrower, but your child would be the sole proprietor, meaning you won’t have ownership of the property, and your name won’t be on the deeds. However, if your child struggles to make their repayments, you’ll need to step in and help them.

The benefit of an Income Boost mortgage is that your child’s ability to borrow will be significantly boosted because the affordability calculations will be based on your combined earnings.

With a higher combined income, an Income Boost can improve your child’s mortgage affordability and allow them to take out a bigger loan versus applying for a mortgage by themselves. So if your child has a deposit but they’re struggling to pass lenders’ affordability checks due to their income, an Income Boost might be a suitable solution.

Keep in mind that if your child stops making their monthly payments, you will be required to step in to cover them.

Common questions on family mortgages

Are there any tax implications if I gift my child a deposit?

If you pass away within seven years of giving your child a large cash gift, they may need to pay inheritance tax (IHT) on the money. Everyone is allowed to give a gift of up to £3,000 away each financial year without qualifying for IHT. It’s also possible to carry over unused allowance from the previous year. So, you could potentially give your child £6,000 in one year without risking IHT later on. Your spouse or partner could potentially do the same, bringing the total gift amount to £12,000 in one year.

Inheritance tax rules can be complicated, though. There are many other rules and exemptions that we’ve not talked about above. So it’s worth taking independent financial or tax advice before making any large financial gifts.

Can I lend my child a deposit?

Yes, you can lend their child a deposit if they’d prefer the money to be paid back rather than given away outright. Because the money is expected to be repaid, it typically won’t be treated as a gift for tax purposes, which can be relevant for inheritance tax planning.

If you wanted to, you could write up an ‘IOU’ agreement which sets out how much is being lent, whether any interest will be charged and how much the repayments will be. This can help avoid disagreements in future as the rules will be written down from the start, but informal agreements typically won’t be legally binding.

Keep in mind that lenders treat gifted deposits and loaned deposits very differently. As we touched upon earlier, some lenders will ask you to sign a declaration that the loan will only need to be repaid when the property is sold.

Other lenders will consider the loan to be a financial commitment, regardless of the terms you and your child have drawn up. This means the lender will factor in your child’s payments to you when carrying out their affordability checks.

Will helping my child buy a home affect my own credit score?

It depends on how the support is structured:

• Gifting a deposit, this won’t usually affect your credit file.
• Lending a deposit informally, this is unlikely to appear on a credit file, though lenders may factor it into affordability checks if it’s declared.
• Joining as a joint borrower (for example, Income Boost), this creates a financial association on both credit files. If your child misses payments, it could reduce your credit score and limit future borrowing.

If you want to remortgage or borrow again soon, you may want to speak to a broker first - like our award-winning team - so you understand how supporting a child could affect your own borrowing options.

Will my child still qualify for first-time buyer stamp duty relief if I help them?

In England and Northern Ireland, first-time buyers pay no stamp duty on the first £300,000 of a property purchase, as long as the property price is £500,000 or less, as of April 2025.

• Gifting a deposit, if the parent isn’t on the deeds or mortgage, the relief is usually unaffected.
• Joint ownership, if the parent is on the deeds, the child will lose first-time buyer relief.
• Income Boost (JBSP), if the parent is on the mortgage but not the deeds, the child will typically retain relief.

Families should confirm the position with their solicitor before completing a purchase, as stamp duty rules can change.

How can I help my child buy a house without sacrificing my own life goals?

The most important thing is to explore options that work for the whole family, not just the child buying the property.

1. Retirement timeline. Consider whether releasing equity or locking savings away could affect later-life income.
2. Emergency fund. Make sure you still have three to six months of living costs in reserve.
3. Other children. Think about how helping one child now could affect fairness across the wider family.
4. Existing mortgage commitments. Joining a child’s mortgage may show on the parent’s credit file and affect future borrowing.

You can speak to Tembo's team of specialist mortgage brokers to discuss your options. We may think of solutions you’d never thought of and help you access mortgage deals that are rewarding for both you and your child.

It’s worth speaking to an independent financial adviser too. They’ll assess your finances as a whole and advise on the next steps. For example, if you’re hoping to retire in the next few years, it’s good to know whether helping your child buy a house fits in with your long-term plans.

What if I have more than one child? How do I keep things fair?

This is one of the most common concerns parents have when helping a child buy a home. Some families aim to offer equal support to each child when the time comes, while others factor earlier help into inheritance planning. Expert advice can help structure support in a way that feels fair across siblings.