Bank of Mum and Dad

Bank of Mum and Dad – what is it?

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Purchasing a property requires the purchaser to put a deposit towards the purchase. Over the last ten years the amount of deposit required has increased, mainly due to increased property prices and what mortgages lenders require.

Not everyone can save enough deposit in time before they want to purchase their first or next home. This is where the parents might be able to provide the deposit that their children need. Parents, and sometimes grandparents, helping financially is also referred to as the Bank of Mum and Dad.

There are several ways the Bank of Mum and Dad can provide a deposit. It could be from savings, equity from their property or a pension.

Speaking to a mortgage adviser will help guide those involved through the options available for their individual circumstances.

Although this is referred to as Bank of Mum and Dad, they do not operate as a Bank does. The deposit provided maybe gifted and there might not be any formal agreements. A couple of things to consider; Bank of Mum and Dad want the deposit back? What will happen to the deposit if it is given to children who are in a relationship and the relationship breaks down?

It’s important that all involved think about how they want to deal with the deposit, there could be financial and legal requirements that need to be considered.

We can help – let’s have a conversation.

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