Can my parents help me with my first mortgage?

Buying a home is a big financial commitment, and it can be especially difficult for first-time buyers. This is why many may look to their parents or other family members for support. If you’re considering this, remember to consult a mortgage broker for advice first. 

Thankfully, there are many ways parents can support first-time buyers. We’re here to explain them.

Giving a deposit as a gift is a common way for a family member to help you.

In order for your lender to confirm this as a gift, however, they would need a ‘gift letter’ from them.

A gift letter is a document which states the gift is genuine and that they will not have a legal interest in your home.

Some lenders also ask for bank statements from your relative or friend to show they have the required funds readily available.

With a guarantor mortgage, your parent or family member pays back the loan if you’re not able to.

There are a number of conditions lenders will expect to see before they consider approving a guarantor mortgage. A primary example is a lender will expect your guarantor to own all their home, or a certain amount of it – at least 30%.

Your guarantor will also need to have a high enough income to cover:

• your repayments

• their repayments 

• how much they usually spend

They’ll also need a good credit score to show that they can manage their finances.

With a joint borrower sole proprietor mortgage, up to four people can help with your payments but none will own any percentage of your home. Parents or family members are also not required to provide savings or guarantees for a deposit. Additionally, unlike a guarantor mortgage, the income of everyone on the mortgage is considered. 

For further information relating to joint borrower sole propriety mortgages, do speak with a mortgage adviser.