Limit put on deposits from Bank of Mum and Dad

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