Gifted Deposits Are More Popular Than Ever Before!

First time buyer mortgage advice

According to research from Legal & General, parents are gifting deposits for their children now more than ever before. In fact, they gift so much now that if the “Bank of Mum & Dad” was actually a bank, it would be one of the top 10 biggest lenders in the UK!

The average parental gifted deposit in the UK is now up to £24,000, so there is no wonder that first time buyers require an extra cash boost! Gifts also come from other family members, including grandparents, as their wealth sometimes skips a generation. 

Thousands of homebuyers every year are reliant on their families to either get onto the housing ladder in the first place or upgrade to a larger home. In fact, if these gifts were not allowable or available the market could be in trouble. 

According to the survey, almost 20% of parents who had helped their children buy did so because they felt it was their personal responsibility to help out. 

First time buyers need all of the help that they can get!

Property price rises have outstripped wage increases over the years, putting purchasing a first home out of reach for many, especially if there is only one income coming into the household. 

Paying out for rent eats into people’s ability to save for their own deposit. Some move back in with their parents for a while in the run-up to moving home to help with saving.

As a mortgage broker, we often deal with clients who save for a 5% deposit and then receive another 5% via a gifted deposit. This would allow the customer to take out a 90% LTV mortgage with a 10% deposit.

Off the back of the survey, Legal and General warned that parents’ generosity could hurt their standard of living in retirement. 

Based on their survey of 1600 parents who had helped out their children, most were gifting from their own savings. Slightly more worrying though was that many were withdrawing from their pension schemes or their own equity. Effectively this is them “fast-forwarding” their child’s inheritance. 

Written by
Malcolm Davidson
Managing Director of UK Moneyman Ltd.
MAQ & CeRER Qualified

1st March 2024

About the Author

Malcolm Davidson

Managing Director of UK Moneyman LTD

Malcolm is one of the UK’s most well-known and respected Mortgage Advisors. He is passionate about providing a 5* customer experience and he has also trained and mentored dozens of fellow Advisors in a career that is now in its third decade.

In addition to his day to day duties as Managing Director, Malcolm still gives out mortgage advice and feels lucky that his job is also very much his hobby.

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