Page 29 - July 2025

EXPERT ADVICE

What is a Gifted Deposit? Acting as a Guarantor Financial and Legal Considerations
Acting as a guarantor means you agree to cover Before providing financial assistance,
ESPC Mortgages’ David Lauder explains how to help your the mortgage payments if your child is unable it’s important to evaluate your own
children buy a property. to do so. While this can help them secure a financial stability. Consider whether
mortgage they might not qualify for on their helping your child could impact your long-
own, it also carries significant risks. Your financial term financial goals, such as retirement
situation could be impacted if you’re required to savings. Additionally, open and honest
make payments on their behalf. Additionally, communication with your child about
serving as a guarantor might affect your own expectations and responsibilities can
borrowing capacity, as lenders will consider your prevent misunderstandings. Seeking
potential liabilities. Often, the term is paid on the professional advice from financial planners
guarantor’s age, which can make the payments or solicitors can also help ensure you’re
higher and the term shorter as it can be assessed making informed decisions that align with
against your ability to work age. It’s essential to your family’s overall financial well-being.
carefully assess your financial position and seek
legal advice before taking on this responsibility. Helping your child buy a home can be a
rewarding experience, but it’s important
Joint Ownership to approach it with careful planning and
Another way to assist your child is by purchasing a clear understanding of the implications.
a property jointly. This arrangement allows By exploring the various methods of
your combined incomes to be considered assistance and considering their financial
when applying for a mortgage, potentially and legal impacts, you can provide
increasing the borrowing limit. However, joint meaningful support while safeguarding
ownership also means shared responsibility for your own financial future.
mortgage payments and property maintenance.
Additionally, if the property isn’t your primary It’s extremely important to deal with a
residence, you may be liable for Capital mortgages expert, like the team at ESPC
Gains Tax if the property is sold in the future. Mortgages, so that they can guide you on
Consulting with a financial advisor or solicitor is the best solution and route for your specific
essential to understand the full implications of circumstances.
s property prices continue to rise, Gifted Deposits joint ownership.
many young people face significant A gifted deposit involves giving your child
A challenges when it comes to buying a sum of money to contribute toward their
their first home. For parents, offering financial home purchase without expecting repayment.
support can be an excellent way to help This type of financial support can increase Helping your child buy a home can be a
their children get onto the property ladder. your child’s chances of securing a mortgage rewarding experience, but it’s important to
Whether through a gifted deposit, acting as and may even help them access better interest
a guarantor, or even purchasing a property rates. However, it’s essential to formalise this approach it with careful planning...
jointly, there are several ways to provide arrangement with a signed gifted deposit
assistance. However, each method comes letter, which confirms to the mortgage lender
with its own financial and legal implications, that the funds are a gift, not a loan, and is
making it crucial for parents to fully non-refundable. This documentation would ESPC Mortgages can help with all aspects of understanding your budget, applying for a mortgage and dealing with the
understand the potential risks and benefits. be produced for signature by your chosen relevant insurance requirements. You can contact the ESPC Mortgages team on 0131 253 2920.
In this guide, we’ll explore the most common mortgage advisor, and ensures that lenders
ways parents can help, the key considerations are satisfied with the buyer’s financial stability The information contained in this article is provided in good faith. Whilst The initial consultation with an ESPC Mortgages adviser is free and
to keep in mind, and how to ensure that the and removes any ambiguity about repayment every care has been taken in the preparation of the information, no without obligation. Thereafter, ESPC Mortgages’ charges for mortgage
process benefits both parties. expectations. responsibility is accepted for any errors which, despite our precautions, advice are usually £395 (£345 for first-time buyers). YOUR HOME MAY
BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A
it may contain.
MORTGAGE OR OTHER LOANS SECURED AGAINST IT.
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