Why First-Time Buyers Need More Help Than Ever
Getting First-time buyers onto the property ladder has never been tougher.
According to Halifax, the average age of a first-time buyer in the UK has risen to 33 years old.
Meanwhile, house prices have outpaced wages for decades, meaning buyers today often need to borrow significantly more than those in previous generations.
Research frequently highlights the growing role of family help, often called the “Bank of Mum and Dad”, in bridging the gap for deposits and affordability.
With that in mind, many parents and grandparents are stepping in to help their first-time buyers generation.
The intention is simple: to help a loved one buy their first home, but each method carries different financial, tax and legal implications.
Below, we break down three common options to consider.
1) Gifting a Deposit to help first-time buyers onto the property ladder
Gifting a lump sum towards the deposit is the most straightforward approach. A larger deposit for first-time buyers can enhance mortgage eligibility and potentially lower the interest rate offered.
Tax considerations: Under current UK inheritance tax (IHT) rules, you can gift up to £3,000 each tax year without it being added back to your estate for IHT purposes (the “annual exemption”).
Larger gifts may become chargeable if you pass away within seven years of making the gift (known as “potentially exempt transfers”).
Potential changes: There have been periodic proposals to simplify or reform IHT, including ideas for flat-rate gift taxes above certain thresholds. If you’re considering a substantial gift, timing and professional advice matter.
Read more about the proposed IHT changes
2) Guarantor (Family-Assist) Mortgages
If an outright gift isn’t ideal for a first-time buyer, a guarantor mortgage (sometimes called “family assist” or “100% mortgages”) can help a first-time buyer borrow with little or no deposit, provided a parent or grandparent guarantees some of the risk.
- Savings as security: You place 5–10% of the property value into a linked savings account with the lender for a period of 3–5 years. Some lenders pay interest on these funds; others may not.
- Property as collateral: Instead of cash, you offer equity in your own home as additional security. If repayments are missed and the loan defaults, the lender could claim against the collateral.
Key risks: Tying up savings or using your home as security can affect your own financial resilience. Ensure you understand exit terms and how/when your funds or charges will be released.
3) Joint Mortgages for getting first-time buyers onto the property ladder
A joint mortgage allows you to apply alongside your child. Combining incomes can increase the amount a lender is willing to offer and may broaden the product choice.
- Stamp Duty surcharge: If you already own a property, being named on your child’s purchase usually triggers the additional 3% Stamp Duty Land Tax (SDLT) surcharge on the whole purchase price.
- Shared liability: You’ll be jointly responsible for repayments. If circumstances change, this can impact your own affordability and credit profile.
“Parents want to help, but it’s vital they do so in a way that doesn’t jeopardise their own financial security.”
— Common guidance echoed by many UK personal finance commentators
Which Option Is Right for You?
The best route depends on your savings, tax position, and appetite for risk. Some families blend approaches, for example, a smaller gift plus a short-term family-assist structure, to reduce exposure while improving affordability.
Tip: Document the support clearly (gifted deposit letter, deed of trust if applicable) and consider how help for one child will be balanced with future support for siblings or other beneficiaries.
Next Steps
If you’re considering any of these options, tailored advice can help you minimise tax, protect your long-term plans, and choose a mortgage route that suits everyone involved.
We’re here to help. Get in touch to help first-time Buyers onto the Property Ladder. Discussing gifting deposits, guarantor products, joint mortgages, or alternative strategies (e.g., Lifetime ISAs, family-offset arrangements) for supporting first-time buyers.
