Q. I have two sons aged 26 and 29 who are currently residing in London. I wish to assist them in entering the real estate market—what would be the most effective approach? Given the high property prices in London, they require substantial support. David, Warminster

Securing a first home can be challenging, especially in London’s high-cost environment, and parental financial support can make a significant difference. Here are several strategies for parents looking to help their children achieve homeownership.

One straightforward method is to provide financial assistance for their deposit. This can reduce their borrowing amount significantly, making it easier to secure a mortgage. Most lenders will require a confirmation letter stating that the funds are a gift rather than a loan. Parents should consider seeking professional advice, as gifting money may have implications for inheritance tax.

Family-Friendly Mortgage Options

Utilizing joint borrower sole proprietor mortgages enables your child to purchase a home under their name while including you on the mortgage. Although not all lenders offer this option, it allows both incomes to be considered, potentially increasing the loan amount and enabling your child to afford a more expensive home. However, both parties share repayment responsibilities, so being aware of the associated risks is crucial.

It is advisable for parents to obtain independent legal counsel to clarify their mortgage obligations—they would not own any part of the property but would be responsible for repayments if the child defaults. Additionally, remaining off the title deeds can help avoid the extra 3% stamp duty that applies to second-home buyers.

A notable mortgage option is the Barclays Family Springboard, which allows family members to help a buyer get started in the property market. This program consists of two participants: the borrower and the helper. Parents or guardians can deposit a 10% security amount into a Helpful Start account.

This enables the buyer to purchase a property with little to no personal deposit. After five years, the deposited amount is returned to the helper with accrued interest (conditions may apply), while the property owner continues their mortgage as usual.

Another option is the Halifax Family Boost mortgage, where a family member invests 10% of the property’s purchase price into a savings account for a lock-in period of three years to accumulate interest. This plan allows first-time buyers to obtain a mortgage with a loan-to-value (LTV) ratio of 95% to 100%. Eligibility requires holding a Halifax Reward current account.

First-Time Buyer Initiatives

The shared ownership scheme provides eligible individuals the chance to buy a share of a home (typically between 25% and 75%) and pay rent on the remaining portion at a reduced rate. Rent is paid to the housing association or developer that retains the ownership.

The required deposit can be as low as 5% of the share’s price, rather than the full property value. Over time, buyers can increase their share and eventually own the entire property. These properties are usually leasehold, implying potential monthly service charges. To qualify in the London area, total household income must be under £90,000.

The Lifetime ISA is a tax-exempt savings vehicle designed to help buyers save for their first property or future investments. Individuals aged 18 to 40 can contribute up to £4,000 per year until reaching age 50, with the government adding a 25% bonus (up to £1,000 annually). Properties purchased with these funds must not exceed £450,000, which can be particularly challenging in London. Early withdrawals for purposes other than first-home purchases incur a 25% penalty, negating the bonus.

If affordable schemes aren’t a match for your sons, other mortgage options are available specifically for first-time buyers.

The Nationwide Helping Hand mortgage allows first-time buyers to secure up to 95% LTV on a five or ten-year fixed rate loan. Eligible buyers can potentially borrow up to 20% more through this product compared to standard offerings.

For renters with a strong history looking to transition to homeownership, Skipton Building Society’s Track Record mortgage requires deposits of 5% or less, with the maximum available mortgage amount set at £600,000, fixed for a five-year term.

Halifax’s First-Time Buyer Boost mortgage enables borrowers to access up to 22% more than typical limits, requiring a minimum deposit of 10% and a combined household income of at least £50,000—all applicants must be employed.

Accord’s £5,000 deposit mortgage caters exclusively to first-time buyers, offering 99% LTV with a minimum deposit of £5,000 and financing ranging from £95,001 to £495,000, excluding flat or new-build purchases.

Adrian Anderson, founder and managing director of Anderson Harris, has over 20 years of experience as a mortgage broker.