Buying a House and the Bank of Mum and Dad


The average age for a first time home buyer in the UK is 31 years of age compared to 2014 when the average age was 25 years of age. 

House prices have dramatically increased and with an increase in house prices also comes an increase in the required deposit. Usually a 10% deposit is required on exchange of contracts.

It’s not surprising there has been an increase in gifts from parents to support their children with funding a deposit and buying their first home. The Bank of Mum and Dad are one of the biggest lenders in England and Wales. Parents are funding deposits from their savings, downsizing or releasing equity from their property to help their children get a foot on the property ladder.

If you are receiving a gift from your parents or family, there are certain matters you and your family should consider before proceeding such as if the deposit is repayable, how is the money being sourced, what happens if things go wrong, do your parents require separate representation and legal or tax advice. 

For free initial advice get in touch with our Conveyancing Solicitors.

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Bank of Mum and Dad Details Required

If you’re buying a house or a flat with help from the bank of Mum and Dad, our Conveyancers will ask you to provide the following information in relation to the gift (money):

      • How much is the gift and is the gift repayable? If you are buying the property with a mortgage you will be required to provide this information to your new lender. Your Conveyancer will request the necessary information and also confirmation from your parents that the gift is not repayable.
      • Your Conveyancer will request ‘source of funds’ information from your parents. This is a requirement to ensure funds are from a legitimate source and will be required as soon as possible to ensure there are no delays in your house purchase.
      • If you are buying your home with a partner or friend and the gift is being provided by one parent, you should consider entering into a Declaration of Trust to protect the gift your parent has provided to you. A Declaration of Trust will set out the value of the contributions towards the property including the deposit i.e. if you provide £20,000 deposit and your partner provides £10,000 the Declaration will confirm this unequal contribution.
      • Unfortunately, if the relationship breaks down between you and your partner and you are forced to either sell or transfer the property the Declaration of Trust will set out how the net proceeds are to be divided. After the mortgage has been redeemed, estate agents and legal fees paid the remaining balance (if any) will be shared equally either by monetary value or percentage. It’s important you discuss this with your Conveyancer and agree how you wish to proceed before exchange of contracts. 

When deciding which Solicitor or Conveyancer to instruct, it's important to understand not only the process of buying a house but also how you safeguard your financial position. If you have recently purchased a property and have not been advised about a Declaration of Trust we may be able to help you with drafting a Cohabitation Agreement or a Prenup or Post Nuptial Agreement.

For free initial advice call our Conveyancing Solicitors

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