HELPING FAMILY WITH PROPERTY
There are several ways families may consider helping someone buy a home or meet other housing costs.
The appropriate approach can depend on what the money is needed for, whether it is intended as a gift or loan, the finances of everyone involved and the property being purchased.
MortgageAdvice.co.uk can help you explore some of the mortgage and property-finance options and, where appropriate, introduce you to a selected adviser who can provide regulated advice.
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Your property may be repossessed if you do not keep up repayments on your mortgage.
Families can provide property support in different ways. Start with the situation closest to what you are considering.
Help with a deposit
Explore ways a family member may contribute towards the deposit needed for a home purchase.
Explore gifted deposits →
Support someone’s mortgage application
Learn about mortgage arrangements where another person may provide additional support for the borrower.
Explore guarantor mortgages →
Buy a property together
Explore mortgages where two or more people purchase or own a property together.
Explore joint mortgages →
Use wealth held in your home
Some homeowners consider releasing money from their property when helping family with housing costs.
Explore equity release and helping family →
Helping someone with a property does not always mean simply giving them money. The way support is provided can affect the mortgage application, ownership of the property and the finances of the people involved.
It is important to be clear about whether money is being given, lent or used in another form of mortgage arrangement.
Giving money towards a deposit
A family member may provide some or all of the buyer’s deposit as a gift. Mortgage lenders will normally want to understand where the money has come from and whether it needs to be repaid.
Lending money to a family member
Money provided as a loan rather than a gift can be treated differently. The lender may need to take the arrangement into account when assessing the mortgage application.
Supporting the mortgage itself
Some mortgage arrangements allow family members to provide support without simply giving the buyer a deposit. The structure and requirements vary between lenders and products.
THE IMPORTANT POINT
The way financial help is structured can have mortgage, legal and tax implications. Everyone involved should understand the arrangement before committing to it, and appropriate professional advice may be required.
A deposit is one of the most common areas where family support may be considered when someone is buying a home.
The amount of deposit available can affect the size of mortgage required and the resulting loan-to-value. However, a mortgage lender will also want to understand where the deposit has come from and the basis on which it has been provided.
01
GIFT OR LOAN
The lender may need to know whether the money is an outright gift or is expected to be repaid. A loan can affect how the mortgage application is assessed.
02
SOURCE OF FUNDS
Evidence may be required to show where the money has come from and confirm the source of the deposit.
03
LOAN-TO-VALUE
A larger deposit reduces the proportion of the property value being financed by the mortgage and therefore produces a lower loan-to-value.
04
THE MORTGAGE APPLICATION
The borrower will still need to meet the lender’s mortgage criteria, including any applicable affordability and credit requirements.
THE IMPORTANT POINT
Providing a deposit does not necessarily give the person providing the money an ownership interest in the property. If the family intends the arrangement to create ownership rights, repayment obligations or other conditions, these should be considered separately and appropriate legal advice may be required.
Family support does not always have to take the form of providing a cash deposit.
Depending on the lender and circumstances, there may be mortgage arrangements where another family member provides additional support for the application.
The way this works varies between products, so it is important to understand what the person providing the support is committing to.
GUARANTOR ARRANGEMENTS
Some mortgage arrangements may involve another person agreeing to support the borrower’s obligations. The requirements and responsibilities can vary between lenders and products.
FAMILY SAVINGS OR SECURITY
Some mortgage products may allow family savings or other assets to provide additional security without simply giving the money to the buyer.
BORROWING TOGETHER
In some circumstances, family members may consider applying for a mortgage together. This is different from simply supporting another person’s individual mortgage application.
THE IMPORTANT POINT
Providing support for another person’s mortgage can create significant financial commitments. The person providing the support should understand when they could become responsible for payments or when money or assets provided as security could be at risk.
Another option may be for family members to buy a property together rather than one person simply providing financial support to the other.
This can involve more than one person being named on the mortgage, owning the property, or both. The precise arrangement can affect the mortgage application and the responsibilities of everyone involved.
01
JOINT MORTGAGE
Where people apply for a mortgage together, the lender will normally assess the applicants and their circumstances as part of the mortgage application.
02
PROPERTY OWNERSHIP
Who owns the property and how that ownership is structured is a separate consideration from simply deciding who will contribute towards the purchase.
03
AFFORDABILITY
Where more than one person is applying for the mortgage, the lender may consider the relevant income, commitments and wider circumstances when assessing affordability.
04
FUTURE CHANGES
It is worth considering what may happen if one person later wants to move, repay their contribution or change the ownership or mortgage arrangement.
THE IMPORTANT POINT
Joining another person’s mortgage or becoming an owner of their property can create long-term financial and legal commitments. Everyone involved should understand the proposed ownership and borrowing arrangements before proceeding, and appropriate legal advice may be required.
Some homeowners consider using wealth held in their own property when they want to provide financial help to a family member.
There can be different ways of doing this. The options potentially available will depend on factors such as the homeowner’s age, income, existing mortgage, property and wider circumstances.
MORTGAGING OR REMORTGAGING
A homeowner may consider taking a new mortgage or increasing borrowing secured against their property. This will normally involve an affordability assessment and regular mortgage repayments.
EQUITY RELEASE
For eligible homeowners, equity release may provide a way of accessing some of the value held in their home. A lifetime mortgage is one form of equity release and works differently from a conventional mortgage.
USING EXISTING SAVINGS
Using money already held in savings may avoid taking additional borrowing, although the effect on the homeowner’s own financial position and future needs should also be considered.
THE IMPORTANT POINT
Borrowing against your own home to help somebody else transfers part of the financial commitment to you. Consider your own current and future needs as well as the benefit being provided to the family member.
However the financial help is provided, it is useful for everyone involved to understand the arrangement before money is committed.
Questions about repayment, ownership and what happens if circumstances change can be easier to address at the outset than later.
01
IS IT A GIFT OR A LOAN?
Be clear about whether the money is being given permanently or whether some or all of it is expected to be repaid.
02
WILL YOU OWN PART OF THE PROPERTY?
Providing money towards a purchase does not necessarily mean the person providing it will own part of the property. Any intended ownership arrangement should be considered separately.
03
WHEN WOULD MONEY BE REPAID?
If the support is a loan, consider when repayment is expected and what would happen if the family member’s circumstances changed.
04
WHAT IF THE PROPERTY IS SOLD?
Consider what is intended to happen to any money provided, loan balance or ownership interest if the property is later sold.
05
CAN YOU AFFORD THE SUPPORT?
The person providing the help should consider the effect on their own finances, including money they may need for future spending or unexpected costs.
06
WHAT IF CIRCUMSTANCES CHANGE?
Changes such as moving home, relationship breakdown, illness or financial difficulty can affect arrangements that were originally expected to remain in place for many years.
THE IMPORTANT POINT
Informal family arrangements can still have significant financial and legal consequences. Where money is being lent, ownership rights are intended or conditions are attached to the support, appropriate legal advice can help ensure the arrangement is properly understood and documented.
RELATED GUIDES
Our guides explain some of the mortgage and property-finance options that may be relevant when helping a family member buy a home or meet other housing costs.
GIFTED DEPOSIT MORTGAGES
Learn how gifted deposits can be used towards a home purchase and what mortgage lenders may want to know about the money being provided.
Explore gifted deposits →
GUARANTOR MORTGAGES
Explore mortgage arrangements where a family member may provide additional support for another person’s borrowing.
Explore guarantor mortgages →
JOINT MORTGAGES
Learn how mortgages involving more than one borrower work and some of the issues to consider when buying together.
Explore joint mortgages →
EQUITY RELEASE & HELPING FAMILY
Learn about using equity release to provide financial help to family and some of the implications to consider.
Explore helping family with equity release →
REMORTGAGING
Explore how replacing an existing mortgage or changing borrowing secured against a home may work.
Explore remortgaging →
LATER-LIFE MORTGAGES
Explore mortgage borrowing and equity-release options that may be relevant to homeowners approaching or in retirement.
Explore later-life mortgages →
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Considering helping family with property?
MortgageAdvice.co.uk can review your enquiry and, where appropriate, introduce you to a selected mortgage adviser to discuss your circumstances and the options that may be available.
No obligation to proceed.
Your property may be repossessed if you do not keep up repayments on your mortgage.
Find a mortgage adviser
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