How Parental Gifts and Loans Can Support First-Time Buyers

Written By Rowan Frayling

With rising property prices, many first-time buyers now turn to the 'Bank of Mum and Dad' for help with deposits. But how this money is structured matters.

Gifted Deposit vs. Loan

  • A gifted deposit is money given with no expectation of repayment.

  • A loaned deposit must be repaid and may impact your affordability assessment.

Lenders prefer gifts, and they usually require a gifted deposit letter confirming:

  • It’s not repayable

  • No stake in the property is being claimed

  • It’s not being borrowed from another lender

However there are some lenders who will allow a loan rather than gift!

What Lenders Will Check

  • The source of the funds (anti-money laundering checks)

  • Whether the gift affects future ownership

  • The gifter’s identity and relationship to the buyer

Alternatives to a Cash Gift

  • Guarantor mortgages

  • Joint borrower sole proprietor (JBSP) arrangements

  • Family deposit mortgages

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Rowan Frayling
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