3 options to consider when helping your children or grandchildren onto the property ladder

Financial planning often focuses on building personal wealth to achieve your own goals in life. However, financial stability also brings the added benefit of being able to support your loved ones.

For example, you might want to help your children or grandchildren get on the property ladder.

As house prices and interest rates remain high, first-time buyers are increasingly reliant on help from their loved ones to purchase a home.

According to the BBC, 52% of first-time buyers received financial help from family last year, with an average gift of £55,572.

If you plan to help your own children or grandchildren in the same way, you may want to consider how you gift wealth, and what kind of support you offer. It’s also important to understand the tax implications of gifting wealth.

Here are three options to consider if you want to help your children or grandchildren get onto the property ladder.

1. Gift wealth for a deposit

Perhaps the most straightforward option is to gift wealth for a deposit. As the cost of living remains high, many first-time buyers might struggle to save enough for a down payment on a house, even if they could comfortably afford the mortgage payments.

By gifting wealth for a deposit, you could help them overcome this barrier. Additionally, giving away wealth now could reduce the size of your estate for Inheritance Tax (IHT) purposes, potentially reducing the amount your family pays after you pass away.

However, it’s important to understand the IHT rules before gifting a deposit.

As of 2025/26, the first £3,000 you give each year automatically falls outside your estate for IHT purposes. This is your “gifting annual allowance”.

Any further gifts you make may be exempt from IHT, but only if you survive for seven years after transferring the wealth. These are known as “potentially exempt transfers” (PETs).

Should you pass away within seven years, there may be some IHT to pay, depending on how long you live for. This will be calculated based on a sliding scale known as “taper relief”.

These IHT rules can be complex, so you may want to seek professional advice before gifting a deposit, so you can ensure you’re passing on wealth as tax-efficiently as possible.

2. Support your child with monthly payments on a 100% or low-deposit mortgage

Many lenders have attempted to address the issue of saving a deposit by offering 100% mortgages, or low-deposit options.

These mortgages may allow first-time buyers to borrow up to 100% of the value of the property they are purchasing. Some options might require a small deposit, but it will be a much lower amount than a traditional loan.

According to IFA Magazine, the number of “zero deposit mortgages” taken out increased by 32% in 2024.

If your child or grandchild takes out one of these mortgages, they may not need to save a deposit at all. However, their monthly payments will typically be higher as a result.

You could help here by giving smaller amounts each month to help them cover their mortgage costs. This could also be useful in situations where your loved ones have saved a deposit but still can’t purchase a property because they’re unable to afford the mortgage payments.

By contributing to their repayments each month, you can take advantage of a lesser-known IHT exemption called the “gifts from surplus income” rule.

According to this rule, you can make as many IHT-free gifts as you like, provided they:

Are regular
Come from income rather than other sources, such as your savings
Don’t affect your standard of living.

These gifts are separate from your gifting annual exemption or any PETs you make. As such, by making regular payments towards a loved one’s mortgage, you might be able to pass on more wealth tax-efficiently.

Again, you may benefit from professional advice here to check that you are operating within the rules and don’t accidentally trigger an IHT charge.

It’s also important to discuss some of the potential challenges associated with 100% mortgages with your loved ones. For instance, if house prices fall, your child or grandchild might end up owing more than their home is worth.

They will typically pay higher monthly repayments too. It could be more affordable overall to pay a traditional deposit, whether they can save the funds themselves or have help from you.

3. Act as a guarantor

A guarantor mortgage is a specific type of loan that requires a third-party to vouch for the borrower and agree to make the repayments if they are unable to.

In the past, 100% mortgages typically required guarantors, but many lenders now offer them without this stipulation.

Normally, mortgage providers will agree to lend a higher amount if there is a guarantor in place. They may also agree to grant a mortgage to an individual that would otherwise have been denied because their income wasn’t high enough.

As such, agreeing to act as a guarantor could be a good option if a family member is having difficulty getting a mortgage at all or needs to borrow a higher amount as they aim to buy in a more expensive area.

However, becoming a guarantor does carry significant risks for you.

If your child or grandchild is unable to make the repayments, you are legally obliged to pay. This could put a significant strain on your budget and make it more challenging to reach your own financial goals.

Additionally, some lenders require you to put up your own property as collateral against the loan. This could mean that you risk losing your home if neither you or your child or grandchild can make the repayments.

That’s why it’s important to consider whether a guarantor loan is the most sensible option, or if you could afford to gift wealth to your loved ones instead.

Get in touch

If you want to explore options for helping your loved ones get on the property ladder, we can help.

Please contact us at hello@ardentuk.com or call or WhatsApp us on 01904 655 330. As an award-winning financial advice company with advisers included in the 2025 VouchedFor Top Rated guide, you can be sure that we’re a bona fide company providing excellent advice and high-quality service.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning or tax planning.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

Remember that taper relief only applies to gifts in excess of the nil-rate band. It follows that, if no tax is payable on the transfer because it does not exceed the nil-rate band (after cumulation), there can be no relief.

Taper relief does not reduce the value transferred; it reduces the tax payable as a consequence of that transfer.