You might have heard of equity release, but did you know it’s a practical and increasingly common way for parents or grandparents to help a first-time buyer get onto the property ladder? Particularly where savings alone aren’t enough. Which, in this market, is more and more likely.
How does it work?
Equity release allows homeowners aged 55+ to access some of the value tied up in their property, usually through a lifetime mortgage. The money released can then be gifted to a child or grandchild to support their home purchase.
Here are some ways it can help…
Boosting the deposit
The most common use is gifting funds to increase the buyer’s deposit. A larger deposit can:
- improve mortgage affordability
- unlock better interest rates
- reduce the need for high-LTV borrowing
Lenders typically require the gift to be non-repayable, confirmed via a gifted deposit letter.
Reducing loan size
Instead of stretching affordability, the gifted amount can reduce how much the buyer needs to borrow, making monthly repayments more manageable.
Supporting family without ongoing repayments
Unlike lending money directly, equity release avoids putting financial strain on the first-time buyer later. There are no monthly repayments required on most lifetime mortgages (unless voluntarily chosen).
Key considerations
- Equity release reduces the value of the estate and can affect inheritance. So it might be useful to think of it as an early inheritance for your children and grandchildren.
- Independent financial advice is essential. Which we can help with!
- The first-time buyer’s lender must be comfortable with gifted funds
Used carefully, equity release can be a tax-efficient, flexible way to help the next generation onto the property ladder. Turning property wealth into practical family support, while keeping expectations clear and finances manageable for everyone involved.
We’ll go through all your options and the finer details. That’s what we’re here for. Contact us today to get started.
This is a lifetime mortgage. To understand the features and risks, please ask for a personalised illustration. Check that this mortgage will meet your needs if you want to move or sell your home or you want your family to inherit it. If you are in any doubt, seek independent advice.
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