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Protecting the Bank of Mum and Dad

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Posted on 25 May 2017

Recent analysis and research from Legal & General report that in 2016, homebuyers received £5 billion of help from friends and family. Therefore it’s not surprising that the Bank of Mum and Dad is one Britain’s best loved financial institutions.

The Bank of Mum and Dad was involved in 25% of all mortgage transactions in 2016 and therefore for many prospective home owners it will be impossible for them to buy without help from friends and family.

On average across England and Wales, parents have provided a deposit contribution of £17,500. If couples buy a house together, what can be done to protect the gift that is made by one of the party’s parents? What would happen if the couple separated? Or if one or both be declared bankrupt? Or if one tragically died?

Many mortgage companies will often insist that the money from the Bank of Mum and Dad is an outright gift. The starting point would be that the outright gift is to both homebuyers. But is it possible for the gift to follow the child ?

There are many ways in which legal and beneficial interest in property can be protected and they may include the following :

i. Buying the property as tenants in common as opposed to joint tenants
ii. Declaration of Trust
iii. Cohabitation contracts
iv. Pre and post nuptial agreements.
v. Loan Agreement and second charge being placed on the property


The Bank of Mum and Dad is the perfect bank, with low or even zero interest rates and very flexible repayment terms. Therefore it isn’t surprising that the Bank of Mum and Dad is the 9th biggest lender in the UK.

Swayne Johnson Solicitors’ advice to parents who are helping their children to take their first steps on the property ladder is clear; seek legal advice and ensure that interests are protected.

Swayne Johnson Solicitors will be hosting three seminars across Anglesey and Gwynedd in June 2017 and Sara Lloyd Evans, family solicitor, will be presenting on the importance of Protecting the Bank of Mum and Dad.

On the 7th of June 2017, we will be at Ciccieth Memorial Hall from 11am – 1pm.
On the 8th of June, we will be at Barmouth Library from 11am – 12.30pm.
On the 14th of June, we will be at Beaumeris Community Centre from 11am – 1pm.

More information can be found here.

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