Bank of Mum and Dad: Depositing Savings to Support a Mortgage

For many parents, helping their children onto the property ladder is a priority. However, not everyone wants to give away their savings permanently. One alternative that some lenders now offer is a linked savings account, sometimes known as a Family Offset or Family Assist mortgage.

This approach allows parents to deposit funds into a special account connected to their child’s mortgage. The money stays in the parents’ name but provides additional security for the lender, helping the child to buy their home — and the savings are usually returned after an agreed period.

How Does It Work?

The parent (the giftor) places an agreed amount (typically between 5% and 20% of the property value) into a linked savings account.
The child (the giftee) takes out a mortgage, which benefits from the parent’s deposit acting as extra security.

The funds are held by the lender for a set period, often around three to five years, or until the child has repaid enough of their mortgage to reach a specified loan-to-value threshold. 

Once this condition is met, the savings are released back to the parent.

Pros for the Giftor (Parent)

• Retains ownership of the savings: The money isn’t given away; it’s held temporarily
  
• Potential interest earnings: Some schemes may pay a modest rate of interest during the holding period.
  
• A defined commitment: You know exactly how long your funds will be tied up.

Cons for the Giftor

• Access is restricted: The money is locked in for the full term, so you’ll need to ensure you won’t need it sooner.
  
• Risk of partial loss: In some schemes, if the child defaults on their mortgage, part of the funds could be used to cover losses.
  
• Limited returns: Interest paid on these accounts is usually lower than traditional savings rates.
  
• No tax advantages: Unlike gifting, this approach doesn’t reduce your estate for IHT purposes.

Pros for the Giftee (Child)

• Helps overcome deposit barriers: The parent’s deposit acts as security, so a larger loan or smaller deposit may be possible.
  
• Access to competitive rates: The extra security can open up lower-rate mortgage products.
  
• No gift required: Parents keep ownership of their funds, which can ease family discussions around fairness and inheritance.

Cons for the Giftee

• Limited lender choice: Only certain lenders offer these products.
  
• Product restrictions: The mortgage rate may revert or change once the savings are released.
  
• Responsibility to maintain payments: Any missed payments could delay the return of the parents’ savings.

Final Thoughts

Depositing savings to support a child’s mortgage can be a practical middle ground, offering real help without permanently parting with capital.
It’s important to understand how the specific lender’s scheme works, including any risks and restrictions, before committing.

The ‘Bank of Mum and Dad / Family’ can really help, but it’s important to seek the right advice and make good informed decisions.

Working with a mortgage adviser who understands these arrangements can help ensure the setup suits both parties and protects everyone’s long-term interests.

Risk Warnings and Disclosures

Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The precise amount will depend upon your circumstances.

Symmonds de Lacey is a trading style of Easy Street Financial Services Ltd, which is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales. Company number 6430453. Registered address: Basepoint, 377-399 London Road, Camberley, Surrey, GU15 3HL.

Please note, we are not tax advisers. For tax advice, please speak to a qualified tax professional.

Information correct at time of writing – May 2026