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The Bank of Mum and Dad

Mar 07, 2025
The Bank Of Mum & Dad
If you’ve been dreaming of buying your first home but are struggling to get the cash together, don’t worry – you’re not alone. 
 
It’s becoming increasingly difficult to get on the property ladder, so it’s no surprise that many homebuyers are turning to their families and the ‘Bank of Mum and Dad’ for help. Explore our guide to find out more.
 

What is the Bank of Mum and Dad?

The Bank of Mum and Dad refers to the financial help that family members, such as parents or grandparents, give younger relatives to help them buy a home. 
 

Types of financial help from the Bank of Mum and Dad

Gifted deposits 

Gifted deposits refer to the money given to a homebuyer, often by a family member, to help them buy a house. They can either be a contribution towards the mortgage deposit or equate to the whole deposit. The person gifting the money does not gain any ownership or legal ties to the home. 
 

Pros and cons of gifted deposits 

Pros:
• The larger your deposit, the better the mortgage rate you will be able to secure
• A bigger deposit means you can consider properties that may have initially been out of your reach
• You can take advantage of our Barratt Homes Parent Power scheme. If you receive financial support from your family or friends to help you get on the property ladder, we could match it up to a maximum of 5% of the purchase price 
 
Cons: 
• Mortgage lenders will require proof that the money is a gift and not a loan. This will involve ID verification and anti-money laundering checks on the person gifting the money, which can result in additional fees
• There will be additional administrative checks, as lenders will need proof of the source of the gifted funds. The deposit gifter will likely need to provide bank statements or other financial documents
• There can be problems like inheritance tax complications. In the UK, this can be an issue if the person gifting the deposit passes away within seven years of giving the gift. If this is the case, you may need to seek advice from an independent financial adviser
 

Bank of Mum and Dad mortgages 

Guarantor mortgages 

If your parents cannot help with your deposit, they could act as guarantors instead. This means that if you are unable to make the mortgage payments, your parents guarantee to pick up the bill.
 
However, it’s worth remembering that your parents would be providing additional security, which will be at risk if you default on the mortgage. Whilst parents are keen to assist their children in getting on the property ladder, it shouldn’t necessarily be done at the expense of their financial security or standard of living.
 

Joint mortgages

You could also consider a joint mortgage with your parents. 
 
A joint mortgage is a loan that two or more people take out to put towards a property. Both people will be jointly responsible for the monthly repayments and share ownership of the house. 
 
This means that you, the homebuyer, could borrow a larger sum than you would be able to on your own. 
 

Family offset mortgages 

Family offset mortgages are when parents use their savings to help their children or grandchildren get onto the property ladder. 
 
You, the homebuyer, will need to create a linked savings account that includes your parents' financial contribution and your own. The balances in the linked account are then used to ‘offset’ the balance of your mortgage. It’s a great way to significantly reduce your mortgage’s interest, as what you pay will be calculated on the reduced balance. 
 
The homebuyer will retain ownership of the money they contributed to the deposit, and the parent's savings will remain in their name and can revert back to them at a later date. 
 

Joint borrower sole proprietor (JBSP) mortgages 

Finally, you could consider a JBSP mortgage. This allows multiple people to make payments on a property, but only one person is named as the owner of the property deeds. 
 
It’s beneficial for first-time buyers because lenders will consider each applicant's income as a collective when assessing how much they can lend. As a result, the homebuyer will likely be able to borrow a larger sum of money and will also receive help with repayments. 



 
Ready to become a homeowner? Explore our fantastic range of new homes across the UK, with unique offers to help you move. 
 
Call or visit our Sales Advisers at your nearest development to find out more. 
 

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