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Bank of Mum and Dad

Journalist: Anna Sagar, Mortgage Solutions / Specialist Lending Solutions

ended 14. February 2023

Interested in speaking to mortgage brokers about the Bank of Mum and Dad (or even the Bank of Grandma and Grandad). 

  1. Is it growing in popularity/usage for first-time buyers or other cohorts of buyers?
  2. Is the cost of living having an impact?
  3. Are grandparents starting to help with deposits now? 
  4. What should borrowers consider when using gifted deposits and what would your advice be? 
  5. Do you think Bank of Mum and Dad is a positive or negative for the mortgage market? 

4 responses from the Newspage community

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Samuel Ewen0
Managing Director at Rosehill Financial Services
We’ve seen huge popularity in gifted deposits. In many cases, particularly in London, even couples buying together still struggle to get onto the property ladder without help from the Bank of Mum and Dad. One important consideration that people might not think about is whether this gifted deposit would be considered a Potentially Exempt Transfer for inheritance tax purposes. Buyers should seek professional advice before proceeding. In my opinion, the Bank of Mum and Dad is a double-edged sword. On one hand, it’s great that parents and grandparents can help their family get onto the property ladder, as it’s becoming increasingly difficult. On the other hand, I believe that if more buyers are now receiving gifted deposits, it adds to the problem that first-time buyers face, namely it can help boost property prices.
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Rita KohliVerified
Managing Director at The Mortgage Stop
Intergenerational lending has become a popular solution for families looking to help their loved ones get on the property ladder, particularly with the cost of living & rising interest rates making it less affordable. In some cases, we've seen children assist their parents, which highlights the changing financial landscape & we have seen grandparents also getting involved who usually have more savings. If you're considering it, then it’s important to be aware of the potential tax implications, such as inheritance tax–always seek professional guidance to be fully informed. Some lenders are providing innovative products to support this approach (Gen Home), making homeownership more accessible. While this can certainly be a positive for the housing & mortgage market, you should consider how this will affect your family dynamic as well.
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Aaron StruttVerified
Product and Communications Director at Trinity Financial
The increased borrowing costs have made things harder for many first-time buyers. Recent figures from Halifax show that almost two-thirds of mortgage completions are now in joint names with two or more people and it is easy to see why.
Parents often want to help their kids onto the property ladder, but with maximum mortgage loan sizes reduced because of the Bank of England rate hikes it is more tricky. Joint Borrower Sole Proprietor mortgages will get more popular as parents find they need to go onto the mortgage application rather than just hand over the deposit.
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Scott Taylor-Barr0
Principal Adviser at Barnsdale Financial Management
Gifted deposits, be that from Mum and Dad or grandparents, are still very much a part of the market and have been for some time, but I've seen no increase in volume. Inheritance is another, albeit sadder, form of parental and grandparents' support in the house-buying process. It is the unfortunate reality that saving up a deposit, even just 5%, is a huge undertaking and beyond some people's means, especially if you are trying to save whilst having to pay rent at the same time; a rental payment that is very often higher than your mortgage payment would be, which is very frustrating for young would-be homeowners.