Bank of Mum & Dad Continues Supporting First-Time Buyers

by | Friday 30th Apr 2021 | Mortgage Insights

happy because Mum and Dad helped out

For many first-time buyers in the UK, the bank of mum and dad continues to play a crucial role in helping them take their first steps onto the property ladder. While the housing market has evolved drastically over the last few years, the challenges of saving for a deposit as a first-time buyer (and increasingly more common as a non-first-time buyer) remain substantial, and parental or family support is often the difference between buying a home or staying stuck in the rental market. In this blog, I will go through the latest facts and figures around the growing reliance on the bank of mum and dad and what it actually means if your family helps you out when putting down a deposit on a property.

The Bank of Mum and Dad in 2025: How It Really Works

Recent research showed that in 2024, financial help from parents and family was more significant than ever. According to a study by Zoopla, nearly two-thirds (63%) of first-time buyers in the past five years received support from their family, with the average contribution standing at a staggering £58,129. This support is critical, especially as the average deposit for a first-time buyer in the UK has risen to £60,100. With many even going way above that due to higher property prices and more stringent mortgage affordability tests. So, what exactly is the bank of mum and dad, and how does it work in today’s housing market? Let’s take a closer look at its meaning, advantages, disadvantages, and the key considerations for both parents and their children.

What Is the Bank of Mum and Dad?

The bank of mum and dad is simply a blanket term that refers to parents (or sometimes grandparents, siblings, or other close relatives) financially supporting their children to buy a home. This support typically comes in the form of a gift, in rare cases a loan, or acting as a guarantor for a mortgage. It is not a literal bank, but more of a metaphor for the finances that relatives can provide to help people purchase a property as opposed to a bank loan or the buyer’s own savings.

How Does the Bank of Mum and Dad Work?

Support from the bank of mum & dad can take many forms, such as:

  • Gifting a deposit: This is the most common form of support, with 66% of first-time buyers receiving help for their deposit.
  • Contributing to legal fees or renovation costs: Around 24% of parents help with legal fees, while 20% assist with renovation expenses.
  • Helping with mortgage payments: Over a quarter (26%) of first-time buyers receive help with monthly mortgage costs.
  • Acting as a guarantor: Some parents may use their own property or savings as collateral to secure a mortgage for their child.

However, it’s essential to understand the implications of this support. For example, parents must consider their own financial stability, the potential tax implications of the bank of mum and dad, and whether the arrangement should involve a formal loan agreement as many lenders will not accept a loan as a form of deposit.

The Bank of Mum and Dad: Advantages and Disadvantages

Advantages

  • Quicker access to the property market: Buyers with parental support can purchase their first home, on average, more than six years earlier than those without help (32.9 years old vs 39.2).
  • Lower borrowing costs: A larger deposit, courtesy of the bank of mum and dad, can reduce the amount borrowed and secure better mortgage rates.
  • Reduced financial stress: With help on legal fees, renovation costs, or even furniture, first-time buyers can feel more secure as they move into their new home.
  • Disadvantages
  • Potential for family tension: Financial support can lead to conflicts, particularly if parents begin to “interfere” in the buying process. Zoopla’s research found that 50% of buyers with parental help reported such interference, with 21% saying parents tried to influence the choice of property.
  • Unequal treatment of siblings: Parents must consider whether they can provide similar support to all their children, as unequal contributions can create resentment.
  • Impact on parents’ finances: Parents need to ensure they won’t compromise their own financial security, particularly with retirement and future care costs to consider.

Parents should also be aware of the tax implications of the bank of mum and dad. For example:

  • Inheritance Tax: If a parent gifts money and passes away within seven years, the gift may be subject to inheritance tax depending on the value of their estate.
  • Capital Gains Tax: If parents co-purchase a property as an investment, they may face capital gains tax when it is sold.
  • Income Tax: Interest earned on loans to children must be declared and may be taxable.

Seeking advice from a tax specialist or solicitor is highly recommended if these types of conversations start happening.

The Future of First-Time Buyers and the Bank of Mum and Dad

Despite recently release lender and government initiatives like the 95% mortgage scheme offered by several lenders, which has helped many buyers to purchase with just a 5% deposit, the bank of mum and dad remains an essential lifeline for many. However, with rising house prices and economic uncertainty, parents must weigh the pros and cons carefully. Consulting professional mortgage brokers like ourselves at Oportfolio and also solicitors and tax advisors can help families make the most sensible and logical decisions.

Speak To A Bank Of Mum and Dad Mortgage Specialist

For first-time buyers, the bank of mum and dad can be life-changing, helping them achieve the dream of homeownership years earlier than they could alone. For parents, however, it’s essential to approach this support thoughtfully, considering the long-term financial impact and ensuring all agreements are clearly documented.

At Oportfolio, we specialise in guiding first-time buyers through the mortgage process, ensuring they find the right product for their needs. Whether you’re a parent looking to help or a first-time buyer ready to take the plunge, our team in Putney is here to help you every step of the way. Contact us today to learn more about how we can help make your dream of owning a home a reality.

We're Here to Help

If you have any questions about UK mortgage news or or anything you’ve read then please get in touch. We’d love to hear from you.

As featured in

Understanding a Volatile Mortgage Market eBook

Download Our eBook

Join our mailing list and receive a link to our latest ebook, Understanding a Volatile Mortgage Market. 23 pages of practical insights to navigate the unpredictable mortgage landscape.

You Will Receive A Link To Your eBook Shortly!