Releasing Equity to Help Your Child Buy a Home
30 April 2026 · Mary Molloy Solicitors
The bank of mum and dad increasingly funds itself by remortgage: parents release equity from the family home and gift a deposit. Done properly it is a clean, well-trodden transaction. The friction points are paperwork — on both sides of the gift — and they are all avoidable with sequencing.
Your side: the equity release
A top-up with your current lender or a remortgage to a new one raises the funds, subject to loan-to-value limits and your own affordability — lenders assess the purpose, and helping family is an accepted one. If the home is owned by one spouse alone, the other's consent to the new mortgage is required under family home legislation. The full mechanics are in our equity release guide.
Their side: what the child's lender demands
The child's lender will require a gift letter confirming the money is a gift, not a loan, and confers no interest in the property being bought — usually on the lender's own form, signed by the gifting parents. It will also trace the funds' source for anti-money-laundering purposes, which your remortgage paper trail answers neatly. Coordinate timing: the gift should land before drawdown of the child's mortgage, with the letter matching the amount exactly.
Say it plainly: gift or loan?
Families sometimes intend a soft loan while signing a gift letter, planning informal repayment later. Do not — the letter is a representation the lender relies on. Decide honestly which it is. A genuine loan is possible but must be disclosed and will affect the child's affordability assessment. A genuine gift raises capital acquisitions tax questions — thresholds, exemptions and reliefs are matters for your accountant or Revenue, and that advice belongs before the money moves, not after.
Read more in our main guide: Equity Release and Top-Up Mortgages · or back to the blog.
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