HomeOwners Alliance logo

Sign up to our newsletter for the latest property news, tips & money saving offers

  • Looking to buy a new home? Start here

Limit put on deposits from Bank of Mum and Dad

A blow for first time buyers as Nationwide puts the brakes on the Bank of Mum and Dad

Bank of Mum and Dad

If you’re a first time buyer, times are tough. But this week, Britain’s second-biggest mortgage lender cracked down on buyers who need help from the Bank of Mum and Dad to come up with their deposit.

The biggest hurdle for first time buyers at the moment is the retraction of the 95% mortgage. According to an analysis by, there are currently just 20 mortgages available for buyers with the smallest deposits of 5%. This represents a 95% drop since the start of the coronavirus crisis.

The availability of mortgages up to 90% LTV and beyond also remains extremely limited.

This difficult climate meant the Bank of Mum and Dad was the obvious place for first time buyers to turn to boost their deposit and access a mortgage.

Nationwide’s cap

But Nationwide’s new rules mean first-time home buyers cannot rely on the “Bank of Mum and Dad” stumping up most of the cash for their deposit. The controversial new policy states that borrowers looking to get a mortgage that will cover 90 per cent of the cost of their home must prove that no more than a quarter of their deposit was gifted to them.

The rule does not apply to customers looking for deals at 85 per cent loan-to-value or lower.

With around 40 per cent of first-time buyers thought to have received financial help from family members last year, the change could affect significant numbers of potential homeowners.

Nationwide has not commented on the reasons behind the rule but it’s likely down to financial uncertainty as a result of the coronavirus pandemic. Ensuring homebuyers aren’t dependent on their parents for a deposit is, arguably, one way for Nationwide to restrict lending to those at lower risk of struggling to repay debt.

Commentators suspect this will have a significant impact on first time buyer numbers over coming months – even with the positive impact of the stamp duty holiday that will allow some first time buyers to wield a larger deposit.

What now for the Bank of Mum and Dad?

The good news is there are a number of other lenders that will let you use gifted deposits.

There are also a number of other schemes – from guarantor mortgages to linked accounts – that allow parents to give their children a leg up on the ladder.

Speak to our mortgage partners at London and Country today on 0800 073 2326 or use the online application to view your options

Notify of
Oldest Most Voted
Inline Feedbacks
View all comments

Looking for fee free mortgage advice?

We’ve teamed up with the UK’s leading fee-free mortgage broker to provide you with expert advice.L&C Logo✓ UK’s leading fee free mortgage broker

✓ Compare 1000s of mortgages

✓ Fully qualified advisers

Find out more >

Compare conveyancing quotes in a few simple steps

Compare conveyancing quotes in a few simple steps

Simply complete our online form to receive instant quotes from quality assured solicitors and licensed conveyancers, ranked by best price, customer satisfaction rating and location.

Get Quotes Now >
close popup ×

Before   you go...

If you found this website useful, could you spare a minute to leave us a review?