Bank of Mum and Dad

Written by Caitlin Armstrong

Thursday, August 24, 2023

The Bank of England has revealed that first-time buyers who have access to the “Bank of Mum and Dad” have a 10-year head start over those who do not when purchasing a house.

First-time buyers face significant hurdles buying a home, such as high house prices, the rising cost of living and high interest rates for a mortgage. Therefore, it is no surprise that many are turning to the “Bank of Mum and Dad” for help.

With the closure of the Help to Buy Equity Loan Scheme it is even harder for people to get on the property ladder. It is expected 61% of first-time buyers receive help from family for their first home.

If you can afford to help your child financially, then it’s important to know how the process works and the potential tax implications. We would recommend that independent tax advice is obtained prior to any payment being made. It is also important to be clear on who the gift is being made to, is it just to your son/daughter or to your son/daughter and their partner jointly? This may affect how they will need to own the property in order to protect the gift.

If you can’t afford to make a withdrawal from the Bank of Mum and Dad, there are still some ways you may be able to help your son or daughter buy a home. There are several ways parents can help their children buy their first home:

Taking out a retirement interest-only mortgage (equity release)
Taking out a guarantor mortgage
Family offset mortgages
A loan
Getting a joint mortgage
Taking out a Joint Borrower, Sole Proprietor mortgage

It is always recommended that you obtain financial and legal advice before making gifts to your children or entering into any financial arrangements.

If you would like to discuss the legal implications of making a gift to your son/daughter, or if you are being gifted money from a parent or other family member and need to know how you can protect that interest, please get in touch today on 0191 255 0255 or email conveyancing@samuelphillips.co.uk.

Written by Caitlin Armstrong, Conveyancer

Caitlin Armstrong is a Conveyancer in the Residential Property team at Samuel Phillips Law.

0191 255 0256

Email Caitlin Armstrong