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.
Gifting a deposit to a first-time buyer
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.
Loaning a deposit to a first-time buyer
Another way for a family member to potentially help first-time buyers is by lending a deposit.
With this type of loan, it’s important that every party understands what you owe and when you’ll pay it back. That way there’ll be no surprises in the future. If your deposit is a loan, rather than a gift, it could affect how much you can borrow.
Guarantor mortgages for first-time buyers
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:
how much they usually spend
They’ll also need a good credit score to show that they can manage their finances.
If you do not have a deposit, you may be able to get a 100% mortgage with help from your parents.
A 100% mortgage is where you borrow the entire amount of the property you wish to purchase. These mortgages are designed to help first-time buyers who cannot afford to build up a deposit.
Only a small number of lenders offer these types of mortgages and each requires a guarantor.
Read more about 100% mortgages.co.uk/mortgages/100-mortgages.
Joint borrower sole proprietor mortgage for first-time buyers
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.
Parental/family concessionary purchase mortgage for first-time buyers
This lets a family member sell you their home below the market value. A lender would want to be sure that you’ll live in it as your main home.
See how much you could borrow
Take a second to pop a few details into our calculator
Get a free Mortgage in Principle (MIP)
Get your MIP and start viewing homes
Check out our mortgage resources
Get a mortgage with Better.co.uk today
What people are saying about Better.co.uk...
Important info & marketing claims
You may have to pay an early repayment charge to your existing lender if you remortgage. Your savings will depend on personal circumstances.
Your home may be repossessed if you do not keep up repayments on your mortgage.
*The savings figure of £420 is based on Better.co.uk remortgage customers in October 2023. Read more on our marketing claims page.
We can't always guarantee we will be able to help you with your mortgage application depending on your credit history and circumstances.
Average mortgage decision and approval times are based on Better.co.uk's historic data for lenders we submit applications to.
Tracker rates are identified after comparing over 12,000 mortgage products from over 100 mortgage lenders.
As of January 2023, Better.co.uk has access to over 100 lenders. This number is subject to change.
For buy-to-let landlords, there's no guarantee that it will be possible to arrange continuous letting of a property, nor that rental income will be sufficient to meet the cost of the mortgage.