Residential mortgages:
Help buying a home
Buying a home can be difficult when your savings, income and local property prices do not quite align. You may be comfortable with the likely monthly payments but struggling to build a deposit, or have a reasonable deposit but find that lenders will not offer enough borrowing.
Different forms of support address different challenges. Shared ownership and shared equity change how a purchase is funded. Gifted deposits provide additional money towards the price. Family assisted mortgages may use a relative’s savings, property or income to help make the purchase possible.
These options are not exclusively for first-time buyers. Some can also help existing homeowners move or allow people to return to homeownership following a change in circumstances. Eligibility depends on the individual scheme or lender.
Shared ownership
Shared ownership allows you to buy a share of a property and pay rent on the share retained by a housing provider. You would normally use a deposit and mortgage to fund the share you purchase.
The deposit is generally calculated against the price of your share rather than the full property value. For example, a 40% share of a £300,000 home costs £120,000. A 5% deposit on that share would be £6,000, with a £114,000 mortgage covering the balance.
This can reduce the initial deposit and borrowing required, but affordability must account for the combined cost of:
Mortgage payments
Rent on the remaining share
Service charges and other applicable property charges
Eligibility, available shares and scheme rules vary across the UK. Shared ownership can sometimes help previous homeowners as well as first-time buyers, subject to the relevant requirements.
Increasing your ownership
Buying additional shares is known as staircasing. The price is generally based on the property’s value at the time, so further shares may become more expensive if its value rises. Buying more normally reduces the rent payable.
The lease determines how staircasing works and whether you can eventually own the property outright. Valuation, legal and mortgage costs may apply.
It is also important to understand responsibility for repairs, how rent and service charges can increase, and the process for selling. Owning a smaller share does not necessarily mean paying the same proportion of maintenance costs.
Shared equity
Shared equity usually combines your deposit and main mortgage with additional funding from a scheme provider. You generally own the property, while the provider holds a financial interest secured against it.
Unlike shared ownership, you do not normally pay rent on an unowned share. However, interest or other charges may apply to the additional funding, either immediately or after an initial period.
Repayment is governed by the agreement. It may be linked to the property’s future value rather than simply the original amount advanced. For example, if an equity loan represents 20% of the property’s value, the agreement may require repayment of 20% of its value when the loan is settled.
Before proceeding, establish:
When the funding must be repaid
How the repayment amount is calculated
Whether interest or fees apply
What happens if the property rises or falls in value
Any restrictions on selling, letting or remortgaging
Availability varies by location and provider. The main mortgage lender must also accept the arrangement. Shared equity can reduce the initial mortgage requirement, but the eventual repayment needs to form part of your longer-term planning.
Gifted deposits
A gifted deposit is money provided towards your purchase without an expectation of repayment, commonly by a parent or another family member.
It can help you buy sooner, reduce the mortgage required or move into a lower loan-to-value band with potentially better mortgage pricing. It does not, however, increase the income available for the lender’s affordability assessment.
The lender and solicitor will normally need to establish:
Who is providing the money and their relationship to you
Where the funds originated
Whether repayment is expected
Whether the person providing the money will have an interest in the property
Lenders differ over acceptable donors and the evidence required, particularly where funds come from overseas.
If the money must be repaid, or the family member expects a share of the property or sale proceeds, that arrangement must be disclosed. Some lenders can consider family loans or more structured arrangements, but they should not be presented as an unconditional gift.
Everyone involved should agree the terms before the application begins, particularly where the buyer is purchasing jointly with a partner.
Family assisted mortgages
Family assisted mortgages allow relatives to support a purchase through arrangements other than an outright gift. The term covers several approaches, including support through savings, property equity or income.
Some products allow a family member to place savings in an account held as additional security for the mortgage. Others allow the lender to take a charge over part of the equity in the family member’s property.
These arrangements may reduce the deposit the buyer needs to provide. The buyer must still satisfy the lender’s affordability requirements.
Understanding the family’s commitment
Savings provided as security may be inaccessible for a period, and their release depends on the mortgage terms and relevant conditions being met. They should not be treated as readily available emergency funds.
Where a relative’s home provides additional security, that property may be at risk if the borrower fails to meet the mortgage obligations. Savings pledged as security may also be used to cover losses.
The amount at risk, duration of the commitment and conditions for release should be clear from the outset. Independent legal advice helps the supporting family member understand the arrangement.
Joint borrower, sole proprietor
A joint borrower, sole proprietor mortgage, often shortened to JBSP, allows someone to join the mortgage without becoming an owner of the property. Their income can support affordability alongside the income of the person buying the home.
A common example is a parent helping an adult child borrow enough to purchase. Some lenders accept other relationships, and these arrangements can also help home movers.
The supporting borrower is responsible for the mortgage debt, despite having no ownership interest. Their income, expenditure, existing borrowing and credit history are assessed, and their age may affect the available term.
Planning for the future
Joining the mortgage can affect the supporting borrower’s ability to obtain other borrowing. Independent legal advice is normally required.
There should also be a realistic plan for removing them if the support is intended to be temporary. This requires lender approval and an assessment of whether the remaining borrower can afford the mortgage.
Keeping a supporting relative off the property title can have different tax implications from joint ownership, but it does not automatically establish eligibility for first-time buyer relief. Your solicitor should confirm the position.
Choosing the right support
The starting point is understanding what is preventing the purchase.
If your income supports the mortgage but your deposit is too small, a gift or savings-backed arrangement may help. If the deposit is sufficient but borrowing falls short, a JBSP mortgage may be more relevant. Shared ownership or shared equity may offer another route where the cost of buying outright is beyond reach.
Some arrangements can be combined, subject to lender and scheme rules. A gifted deposit might support a shared ownership purchase, for example, or be used alongside a JBSP mortgage.
The right approach should work for both the buyer and anyone providing support. Our role is to explain the options, compare the full costs and responsibilities, and help you choose an arrangement that fits your plans.
It starts with a conversation.
Frequently asked questions.
Every client and every mortgage is different, but there are some questions we are asked regularly.
From affordability and deposits to complex income, expat mortgages and specialist property finance, our FAQs explain how different lenders may approach different circumstances.
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