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If you’re a parent or grandparent, you’ve probably watched the younger generation struggle to get a foot on the property ladder. With house prices soaring and deposits out of reach for many, it’s no wonder more families are looking for ways to lend a helping hand.
But before you dip into your savings or put your home on the line, it’s important to understand how new mortgage options work – and what they mean for you. This guide is here to help you navigate the risks and rewards of supporting your loved ones on their journey to homeownership.
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It’s no surprise that getting a foot on the housing ladder is difficult, but the statistics are sobering. Since 1997, the average house price has risen by 173%, increasing to 253% in London.
Meanwhile incomes have not kept pace with those rises. The proportion of young adults who would need to spend more than six months’ income on a 10% deposit for the average (median property) in their area has increased from 33% to 78% in the last 20 years. So it’s easy to see why younger generations fear they’ll never be homeowners.
But providers have been finding new ways to help bridge this. Family mortgages are one solution that’s growing in popularity, according to experts.
Also known as an intergenerational mortgage, a family-supported mortgage is an umbrella term for a range of products that aim to marry the needs of younger family members with the financial security of older members – most often parents or grandparents.
There is also a rising trend for multi-family mortgages, which is a shared mortgage when different generations are also sharing a home. Rising housing costs have also driven a rise in arrangements such as young adults choosing to live with their parents, blended families living under the same roof, or older relatives sharing a home with children as their care needs increase. In these cases, there is likely to be more than one person named on the mortgage and property title.
Usually, family-supported mortgages are designed for first-time buyers. If you’re the person giving them a helping hand, you may be acting as a guarantor (depending on the type of mortgage). You won’t usually be named on the deeds.
The idea is that financially stable family members can help secure a mortgage for relatives, sometimes without having to hand over hard cash. Some allow you to use your property as a guarantee, while others require you to put funds in a special savings account with the lender.
The main types of family-supported mortgage are:
Stephanie Charman, chief executive of the Association of Mortgage Intermediaries, says: “Family-supported mortgages are an expanding area of the market, reflecting the growing need for additional help with deposits, affordability or both. Lenders continue to innovate in this space with a wide variety of products now falling under the umbrella of family-supported mortgages.”
According to a report by Savills, 173,500 first-time buyers received assistance last year, receiving an average of £55,572. Overall, the ‘Bank of Mum and Dad’ has provided £38.5 billion of assistance over the past four years. And figures from the Bank of England show that first-time buyers accounted for 27% of all new house purchases in the second quarter of this year.
Richard Dana, founder and CEO of mortgage and savings platform Tembo, which partners with Saga Mortgages, told us: “Over the past three years we’ve seen the number of family-supported mortgages treble in volume. One of the biggest indicators that this is a growing trend is the number of lenders that offer these products – five years ago there were under 10 and we now have more than 20 providers, including large banks such as NatWest moving into the market.”
These types of mortgage need financial stability from the older relative. Craig Poulter, director of Venture Mortgage Management, told us: “Multi-family mortgages work really well for families where the older applicant is still working and has either no mortgage or a small one. They’re great for families who have money in savings that they don't need access to for the next five years. Unfortunately, they don't tend to work for retired applicants with a modest pension (if income is required).”
Cameron and his mother Elizabeth are an example of how this type of mortgage can work.
Cameron worked hard to build a deposit over five years, working part-time as a kitchen assistant, and living at home with his parents in East Lothian, Scotland to save on rent.
But despite his hard work, rising house prices still made the process difficult. Eventually they found a one-bedroom bungalow they thought was perfect, and Cameron, who was then 27, could afford to pay the deposit on the new house by himself. It seemed like a dream come true. The only issue was the mortgage payments, which, compared to Cameron’s modest monthly income, were looking fairly steep.
After having no luck with her own mortgage provider, Elizabeth found Saga Mortgages online. She spoke to an adviser about their needs, and decided the best option was an ‘Income Boost’ mortgage, which is a type of joint borrower sole proprietor mortgage. This type of guarantor mortgage would allow Elizabeth to combine her income with Cameron’s income, making his borrowing potential 3.6 times higher.
The Saga team helped them secure a five-year fixed-rate deal. They agreed that Elizabeth would help with Cameron’s repayments.
Elizabeth said: “For us, it’s the best option. Without the Income Boost, Cameron would never be able to afford it. We can afford to help and see him settled.”
Although multi-family mortgages will help many people, they won’t be the right product for everyone.
Richard Dana, from Tembo, says: “They generally don’t work well when the supporting family member is over the age of 70, because the mortgage term may need to be shortened to fit within affordability rules, which can make repayments too high for the buyer.
“They also require all applicants to have a strong credit history. If either the buyer or the family member has recent credit issues or a high level of existing borrowing, they are unlikely to meet lender criteria. In those situations, other forms of support or different routes into ownership may be more appropriate.
“Good advice is important to ensure the right approach is taken,” he says.
While helping a child or grandchild onto the property ladder can be rewarding, it’s essential to understand the risks before committing:
Because the risks and products vary, it’s a good idea to get independent financial advice to ensure you choose the right approach for your family’s circumstances.
Your home may be repossessed if you fail to repay your mortgage. Saga Money may receive payment from Tembo if you get a mortgage offer via the Saga Mortgages service. This will not affect the amount you pay for the service.
Saga is a registered trading name of Saga Personal Finance Limited, which is registered in England and Wales (company number 3023493). Registered office 3 Pancras Square, London, N1C 4AG. Saga Personal Finance Limited is authorised and regulated by the Financial Conduct Authority under the registration number 178922.
Tembo Money Limited (12631312) is a company registered in England and Wales with its registered office at 18 Crucifix Lane, London, SE1 3JW. Tembo is authorised and regulated by the Financial Conduct Authority under the registration number 952652. Tembo Money was awarded Best Mortgage Broker at the British bank awards in 2022, 2023, 2024 and 2025.
Provided by Tembo
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