Mortgages advisors say parents and children should think carefully about how to make the most of the ‘bank of mum and dad’

A leading Romford-based firm of mortgage advisors has said that parents and children should think carefully about how to make the most of any parental gifts in the form of assistance from the ‘bank of mum and dad’.

Advisors at Home of Mortgages made the comments against the backdrop of constantly increasing house prices.

First-time buyers have for a long time now been faced with the two-pronged challenge of building up ever-larger deposits and persuading lenders to offer them a sufficient sum to buy their first property.

This has made the ‘bank of mum and dad’ more important than ever. The Social Mobility Commission reports that 34 per cent of first-time buyers had help from their families – which is an all-time high.

Michael O’Brien, Managing Director at Home of Mortgages, said: “While parents can simply make a financial gift, this could have tax implications and only assists with increasing the deposit. It does not necessarily increase the amount that can be borrowed.”

However, he said that there are a range of innovative mortgages available to assist. These include guarantor mortgages where the parent guarantees the debt, concessionary purchases where a parent sells a property to their child below market rate and joint borrower/sole proprietor mortgages where parents are named on the mortgage to increase the amount that can be borrowed but are not named on the deeds.

Meanwhile, according to Michael O’Brien, other options include family deposit mortgages, family offset mortgages, flexible family mortgages and first start mortgages with joint ownership.

He said:

There is a lot to consider when thinking about using these products. Our specialists can advise on the best options in specific circumstances, helping to ensure that support from the ‘bank of mum and dad’ goes as far as it possibly can do.