Buying a property in the UK is not a transaction but a stage of life. This stage can be even longer and more daunting, especially as government policies constantly shift.
For many families, the solution has come through intergenerational support. More than ever, parents are stepping in to help their children take that all-important first step toward home ownership. But the ways in which parents can help can go far beyond simply gifting a deposit.
What Are The Practical Ways Parents Can Help Their Children Buy a Home?
1. Encourage Saving Through a Lifetime ISA (LISA)
One of the simplest and most impactful ways for parents to support their children early is to encourage them to open and consistently contribute to a Lifetime ISA (LISA).
How it works:
Children aged 18 to 39 can open a LISA.
They can deposit up to £4,000 per year, and the government will add a 25% bonus (up to £1,000 per year).
The funds can only be used to purchase a first home valued up to £450,000 or for retirement after age 60.
The LISA must be open for at least 12 months before it can be used for a house purchase.
2. Support the Deposit – Not Just With Gifts
The most common route for parental support is to gift a deposit and it is accepted by a vast majority of lenders, but this isn’t the only method — and sometimes it isn’t the most suitable one either. Not all parents are in a position to give away savings permanently.
Below are the two examples of how lenders are able to add flexibility to the arrangement.
Gen H Deposit Boost gives helpers the choice between an interest-free loan (repaid at face value) or an equity loan (returns vary with property value). Repayment is flexible, and the arrangement can be converted to a gift at any time. Gen H manages the legal structure and repayments, offering flexibility for both parties.
Barclays Family Springboard Mortgage requires the helper to lock away 10% of the property value in a Barclays account for five years. The helper earns interest, and the money is returned if the buyer keeps up with payments. The helper’s money is at risk if the buyer defaults, and the funds are not accessible during the lock-in period
3. Become a Joint Borrower Without Ownership (JBSP)
Some lenders offer a Joint Borrower Sole Proprietor (JBSP) mortgage, where a parent helps with affordability but does not go on the deeds. This means:
The child is the sole legal owner
Parents help "boost" income for affordability
There are usually no Stamp Duty implications for the parent
While there are a few lenders that are able to offer this product, Gen H and Saffron are the top 2 lenders that will allow longer terms on the mortgage even if a joint borrower is much older.
Mortgage lending criteria are constantly evolving. New products come to market frequently, especially for first-time buyers and family support structures.
As an independent, representative of the whole of market mortgage brokerage company we can:
Help you explore all your options, not just the big banks
Ensure that the structure of support fits your financial goals
Guide you and your children through the entire application process
For a more detailed conversation of your circumstances, please don’t hesitate to get in touch.
