Helping your child buy their first home is a big decision. House prices keep rising and getting a mortgage is tougher than ever, which means many parents are stepping in to help.
If you're thinking about supporting your child onto the property ladder, here's what you need to know.
The property market has become really challenging for young people. In 2024, the average first-time buyer paid £335,800 for their home and needed a deposit of £75,072. Most first-time buyers are now nearly 34 years old before they can buy. For many, family support has become essential.
In 2025, 34% of all first-time buyers received help from family, with the Bank of Mum and Dad (BOMAD) providing £9.6 billion in gifts and loans. On average, parents gave £55,572.
There are several ways to support your child. Each works differently and comes with its own considerations.
The most common approach to buying a home for your child is giving them money for a deposit. This helps them access better mortgage rates and reduces their monthly payments. Most lenders accept gifted deposits, but they'll ask you to confirm it's a gift rather than a loan that needs repaying.
What about tax? Your child won't pay tax on the money, and you won't pay tax when you give it.
However, inheritance tax might apply if you pass away within seven years of making the gift. You can give £3,000 each year that's immediately exempt from inheritance tax, and you can carry over last year's allowance if you didn't use it.
This means two parents could give a combined amount of £12,000 without inheritance tax concerns if they hadn't gifted money to anyone in the previous two years.
You could act as a guarantor on your child's mortgage. This means you're legally responsible if they can't make payments, but the mortgage stays in their name. This approach helps them access mortgage products they might not otherwise qualify for.
Just be aware that if your child can’t keep up with payments and you can’t cover them, the property could be repossessed. You may be able to step away from being a guarantor later — typically when they come up for their first remortgage after paying down enough of the mortgage.
Not all lenders offer guarantor mortgages, so it's worth speaking to a mortgage broker to find the right option.
Some parents buy a property for their child or pay most of the purchase price. If you're considering this, then it’s important to understand how stamp duty works in this situation.
If you buy a property for your child while you still own your home, you'll pay an additional 5% stamp duty on top of the standard rates.
|
Property Value |
Standard Rate |
Additional Property Rate |
|
Up to £125,000 |
0% |
5% |
|
£125,001 to £250,000 |
2% |
7% |
|
£250,001 to £925,000 |
5% |
10% |
|
£925,001 to £1.5 million |
10% |
15% |
|
Over £1.5 million |
12% |
17% |
For example, if you buy a £300,000 property for your child while owning your own home, you'd pay £20,000 in stamp duty. Without owning another property, you'd pay £5,000. These rules apply in England and Northern Ireland.
Important: If you buy the property in your name, your child's first-time buyer status remains unaffected for future purchases.
However, if you put the property directly in your child's name and they qualify as a first-time buyer, they could benefit from stamp duty relief (no stamp duty on properties up to £425,000) - but this would use up their first-time buyer status.
Can you avoid the extra charge? You won't pay the higher rates if you don't own a home yourself. You can also get a refund if you sell your previous home within three years of buying your child’s new property - but you need to claim the refund within 12 months of selling the old home or within 12 months of the SDLT filing date — whichever is later.
You can apply on the government website, and refunds usually take around 15 days to process.
Buying together: You could buy a property jointly with your child. You'd both own it, and both be responsible for the mortgage. This can help with affordability, but means both parties are tied to the property.
Equity release: If you don't have savings but have equity in your home, you might consider equity release . However, this reduces the value of your estate and affects what you can pass on. It's worth speaking to a financial adviser first to make sure it's the right move for you.
Shared ownership: This can be a useful option where parents want to help but can’t afford to gift a full deposit or buy a property outright. These schemes allow first-time buyers to purchase a share of a home (typically between 25% and 75%) and pay rent on the remaining share, which significantly reduces the upfront deposit required.
For parents, this can mean a smaller financial contribution still makes a meaningful difference — for example, helping with a deposit on a 25% share rather than the full property value. If your child decides it’s the right option for them, it can be a practical way for you to support them without overextending your own finances.
Your own finances: Helping your child buy a home can put pressure on your own finances. Recent research from Aldermore shows many parents are cutting back or stretching themselves to help — with some downsizing, remortgaging, withdrawing pension lump sums, or letting children live rent-free so they can save.
Before offering support, make sure you understand the long-term impact on your savings and retirement plans, and consider getting professional advice.
Protecting your contribution: If your child has a partner, think about what happens if the relationship ends. A solicitor can help structure things to protect your money.
Your other children: If you have multiple children, consider how helping one affects your finances and whether you'll be able to offer similar support to your others.
Professional advice: Speak to a financial adviser before making any big decisions. They'll help you understand the tax implications and ensure you're making the right choice.
Research shows 73% of people wanting to buy say their parents owned a home, but only 48% think they'll own one themselves. Almost 2 million people don't think they'll be able to buy like their parents did.
Even where parents can’t gift a deposit, support can still make a real difference. More young adults are staying at home for longer — often referred to as the “Hotel of Mum and Dad” — allowing them to save more quickly by avoiding high rents and household bills. For many families, this kind of support is just as important as direct financial help.
Helping your child onto the property ladder can be rewarding, but it's essential to plan carefully and get professional advice so it works well for everyone involved.
Disclaimer: We make every effort to ensure content is correct when published. Information on this website doesn't constitute financial advice, and we aren't responsible for the content of any external sites.
Fiona is a personal finance writer with over 7 years’ experience writing for a broad range of industries before joining Ocean in 2021. She uses her wealth of experience to turn the overwhelming aspects of finance into articles that are easy to understand.
