Full width project banner image

The bank of Mum and Dad

With many young people struggling to find the money to put down a cash deposit, it comes as no surprise that the majority are leaning on their parents to help them find the money.

If you’ve made plans for your parents to help you financially, then just be aware that there’s a set procedure to follow, as this money has to be officially ‘gifted’.

What is gifting money and what does it involve?

The difference between being loaned and gifted the money is that you don’t have to pay a gift back.  You will need to ask your parents to write a letter detailing how much they’ll be gifting, and that the money does not need to be repaid.

If your parents would rather loan you the money, i.e. it does need to be paid back, then your mortgage adviser will have to take these payments into consideration when working out your total repayment (mortgage and loan to parents).

Guarantor mortgages

A close relative can act as a guarantor on your mortgage, with their income taken into account when working out how much you can afford to borrow. Therefore, you may be able to borrow more than if you were applying on your own. However, if you’re unable to make the repayments, your guarantor will be expected to make them on your behalf.