How parents helping with mortgage options can get first time buyers onto the property ladder
As a parent, you’re there for their first steps to keep your child safe and steady – it only makes sense you want to be there when they take their first step onto the property ladder, too.
Key takeaways
- Parents helping with mortgage costs can support first-time buyers through gifted deposits, joint mortgages or releasing equity.
- A gifted deposit can lower loan-to-value (LTV), improve mortgage rates and increase lender choice.
- A joint mortgage with parents can boost affordability by combining incomes.
- If parents are added to the property title and already own a home, the 3% SDLT surcharge may apply.
- You can gift any amount towards a house deposit, but inheritance tax rules (including the 7-year rule) may apply.
- New-build homes can help first time buyers with predictable costs, energy efficiency and tailored incentives.
- The Persimmon Homes Bank of Mum and Dad scheme offers a £2,000 thank-you payment when a parent gifts at least 5% of the purchase price, subject to eligibility.
With house prices and deposit requirements still a challenge for many first time buyers, family support can make all the difference. From gifting a deposit to borrowing together, there are several ways parents helping with mortgage needs can support a purchase sooner and on better terms. Let’s take a look.
Gifted deposits: what they are and how they work
A gifted deposit is money given by a parent or close relative to put towards the buyer’s deposit. By increasing the deposit, the loan-to-value (LTV) falls, which can open up more lenders and lower interest rates.
For mortgage purposes the gift must be unconditional: the giver cannot expect repayment and does not gain a beneficial interest in the property through the gift alone.
Process and documentation:
- Funds are transferred to the buyer (usually before exchange). The buyer’s conveyancer confirms the source of funds and satisfies anti-money laundering checks.
- Lenders typically require a gifted deposit letter stating the amount, that it is an outright gift, that the giver will not reside or obtain a stake in the property and will provide proof of identity and source of funds.
- If parents want the money repaid or to share in future equity, it must be structured as a private loan or equity agreement and disclosed to the lender. A formal loan agreement or declaration of trust is advisable.
Impact on eligibility and affordability:
- A larger deposit can reduce monthly payments and unlock more competitive rates.
- Some lenders only accept gifts from close family. All standard affordability checks on the buyer’s income and outgoings still apply.
- Where the gift makes up a large proportion of the deposit, lenders may request extra confirmation that monthly payments are sustainable without ongoing parental support.
This route is common for families exploring parent help mortgage options and forms a core part of how parents helping with mortgage plans can help their kids get onto the property ladder without tying up their home or risking their home as security.
Chris and Annette were able to help their children onto the property ladder after downsizing into a Persimmon home
Joint mortgages with parents
The second option available is when you take out a join mortgage with your parents. Buying together can make a big difference to what you can afford. By combining incomes, you may be able to borrow more and boost your buying power.
Everyone named on the mortgage is equally responsible for the repayments, so it’s important that all parties feel comfortable with the commitment.
When it comes to ownership, you can choose how the property is shared. You might own it in equal shares, or split it into defined percentages that reflect what each person has contributed. These details are usually recorded in a simple legal document called a declaration of trust, giving everyone clarity and peace of mind from day one.
Advantages:
- Combined incomes can increase the loan amount available and secure more favourable rates if parents have strong credit.
- Tenants in common can ring-fence contributions and clarify how sale proceeds are divided.
Challenges and costs:
- All borrowers are responsible for the full debt. Parents’ involvement may affect their ability to borrow for other needs.
- If parents are also on the legal title and already own another property, the 3% Stamp Duty Land Tax (SDLT) surcharge for additional properties may apply.
- Lender age limits can shorten the mortgage term to reflect the oldest borrower, which may increase monthly payments.
It’s a good idea for everyone involved to get their own legal advice, just to make sure everything is clear. Talk through how bills and maintenance will be shared, and consider a simple agreement, like a cohabitation agreement or declaration of trust, to set things out from the start.
It also helps to plan for the future - for example, parents could step back when the mortgage is remortgaged, or the loan-to-value has fallen.
Remortgaging to gift equity is more common than you think
Remortgaging allows homeowners to borrow against the value of their property, releasing equity that can be used for any legal purpose, including gifting a house deposit. This is a popular way for parents to provide lump‑sum support to family members.
Understanding responsibilities and how to manage them
Parental support can help first-time buyers get on the property ladder faster, but it's important to carefully plan.
- If parents act as guarantors or joint borrowers, they’re responsible if repayments are missed. If equity is released, it may affect future plans or the value of an estate.
- Joint borrowing or guarantees can link credit records. Keeping up with payments helps protect everyone’s credit.
- Adding a parent to the property title could affect Stamp Duty Land Tax if they already own a property. Getting advice beforehand makes sure there are no surprises.
With a little planning, these steps make parental support practical and straightforward, helping families support each other with confidence.
Finding the right home: why new builds suit first-time buyers
Choosing the right property is key. New-build homes offer practical advantages that help first-time buyers keep costs predictable and protect monthly budgets.
- Tailored incentives: at Persimmon, we offer flexible financial help that complements parental support, such as contribution towards deposit or legal fees, subject to lender approval.
- Lower running costs: modern insulation and energy-efficient systems often mean reduced energy bills compared with many older properties.
- Peace of mind: new-build warranties (such as 10-year warranty) and builder guarantees reduce the risk of unexpected repair costs in the early years.
- Fixed timetables: with no onward chain, completions can be more predictable, which suits buyers coordinating gifted deposits or time-limited mortgage offers.
Persimmon offers a wide range of homes across the UK, with layouts and prices suited to different budgets. For many families using parent help mortgage solutions, a new build can be the final piece that helps them move swiftly into their home.
Persimmon's Bank of Mum and Dad scheme
At Persimmon, we know that family support can be a vital step toward getting on the property ladder - especially for first-time buyers. That’s why we’ve created the Bank of Mum and Dad scheme to make parental or family help work harder when you’re buying a new Persimmon home.
If you’re a first-time buyer and a parent (or close family member) gifts you at least 5% of the purchase price, Persimmon Homes will say thank you by gifting them £2,000 after completion - helping recognise their support in a meaningful way.
How the scheme works
- Eligibility: You must be a first-time buyer and a family member must contribute a minimum of 5% of the purchase price as a gift. Proof that the funds are gifted (not a loan) is required.
- Speak to the sales team: Visit the Persimmon sales adviser at your chosen development to find out if this scheme is available on your selected home.
- Mortgage support: We can introduce you to recommended independent financial advisers to help explore mortgage options that suit your situation.
- Thank-you payment: After you complete your purchase, Persimmon will pay £2,000 to the family member who gifted the deposit, as a token of appreciation.
What buyers should know
- The gift must be confirmed in writing (a “gifted deposit letter”) and meet lender requirements.
- The Bank of Mum and Dad scheme is available only on selected plots and developments and subject to status and availability.
This scheme is a practical option if you’re asking “Can I help my child buy their first home?” - giving both you and your family the support and clarity you need to make home ownership a reality.
Aaron and Jasmine bought their dream first home with Persimmon
Next steps
Start by agreeing what support is feasible and sustainable for the family. If you are considering a Persimmon home, our sales team can introduce you to independent financial advisers familiar with our Bank of Mum and Dad scheme and new-build lending criteria.
With the right structure, clear documentation and a well-chosen new-build home, parents helping with mortgage solutions can give first-time buyers the confidence to move forward. Whether you need parent help mortgage guidance, are asking can I buy a house with my daughter, or are buying a house for a family member, a clear plan can protect everyone and get them into their dream home sooner.
Frequently Asked Questions
For mortgage purposes, a gifted deposit must be unconditional. If parents expect repayment or a share of future equity, it should be documented as a loan or equity share and disclosed to the lender.
If parents are on the legal title and already own another property, the 3% SDLT surcharge can apply.
Yes, but lenders must be told. A written loan agreement should set out interest, repayment terms, and any security. Some lenders treat a parental loan as a financial commitment, which can reduce affordability.
Independent legal advice for all parties, declarations of trust for defined ownership shares, and insurance aligned to the mortgage. Keep a contingency fund and review the mortgage at each product end date.
The Bank of Mum and Dad is a common term for family financial support. It can involve gifts, guarantees, or joint borrowing. Used wisely, it is central to how parents helping with mortgage options can help their kids get onto the property ladder while protecting their home and long-term plans.
You can gift any amount of money to your child for a deposit - Lenders and solicitors regularly deal with large gifts (e.g. £20,000+), and the recipient does not pay income tax simply for receiving the money but you may pay inheritance tax.
A gifted deposit is usually treated as a Potentially Exempt Transfer (PET) for inheritance tax purposes:
- If you live for 7 years after making the gift, it becomes fully exempt from inheritance tax.
- If you die within 7 years, the gift may still be counted as part of your estate.
