Getting family help onto the ladder
In this guide
Family help to buy your first home
If you're saving for your first home, you might have family in position to help. (If you're really lucky).
Financial support could get you on the housing ladder sooner. But it's important everyone involved has a clear understanding of what that support looks like.
Getting independent legal or financial advice is a good idea. It helps make sure you're all making fully informed decisions.
Here are some of the main ways your family can help you buy your first home:
Gifting money for your deposit
A family member can give you a lump sum towards your deposit. It must be a true gift. Which means:
- You're not expected to pay the money back.
- Your family member won't have any legal claim to your home.
Everyone should understand that you won’t be repaying the money, and they’ll have no legal rights over your property.
What you'll need to do:
-
Have proof of the money
Your solicitor and lender will ask for documentation (like a bank statement) showing where the money came from.
-
Get financial advice
It's not nice to think about - but if the person gifting you money dies within seven years, inheritance tax might apply to the sum they gave you. A financial advisor can help you understand the risks and what that could mean for you.
Lending money towards your deposit
A family member could choose to lend you money to boost your deposit; instead of gifting it. If the money is a loan rather than a gift, your family member is expecting to be repaid; possibly with interest.
It's really important to set clear terms for how you'll repay them. A formal loan agreement can outline how and when the money will be paid back, and what happens if you can't make your repayments.
What you'll need to do:
-
Share proof of the loan
Your mortgage lender will want to see your loan agreement. Be aware that some lenders don't accept deposits that come from borrowed money.
-
Get legal advice
A loan agreement is a legal document, so you’ll need a solicitor. It's also worth talking to a mortgage adviser who can help you understand how different lenders view family loans.
Other ways your family can help
Depending on your lender, your family might also be able to support your mortgage application in other ways. For example:
- Acting as a guarantor
- Applying with you as part of a Joint Borrower Sole Proprietor (JBSP) mortgage. This lets them help with repayments without owning the home.
Speak to a mortgage adviser to understand which options could work for your situation.
- Saving your deposit
Need a helping hand?
Getting on the property ladder sometimes requires a little help. We have some ways you can get extra support.