With UK house prices remaining high and deposits harder to save, many young adults struggle to get onto the property ladder—especially in London and the South East. Increasingly, parents and even grandparents are looking for ways to give their loved ones a leg up. One increasingly popular option? Using equity release to unlock tax-free cash from your home and gift it as a deposit.
If you’re over 55 and own your home, here’s how equity release can help your children—or even grandchildren—buy their first home sooner.
Why Gifting a Deposit Can Make a Big Difference
In 2025, the average UK first-time buyer deposit is over £60,000—and often higher in places like Surrey, Kent, or Greater London. A financial gift from a parent can:
- Reduce the size of the mortgage needed
- Help secure a better mortgage rate
- Speed up the buying timeline
- Give children peace of mind during a tough housing market
This support is sometimes referred to as the “Bank of Mum and Dad”—and it’s now one of the UK’s biggest lenders.
How Equity Release Can Help
Equity release, typically through a Lifetime Mortgage, lets homeowners over 55 unlock a portion of their property’s value as tax-free cash. You continue living in your home, and the loan is repaid when you pass away or enter long-term care.
You can use the money released to:
- Gift a lump sum deposit to your child
- Help with legal or moving costs
- Support them during early mortgage repayments
Unlike selling or downsizing, equity release lets you stay put while still making a big impact on your family’s future.
Is the Gift Tax-Free?
Yes—equity release funds are not taxable because they’re a loan, not income. However, gifting large amounts may have Inheritance Tax (IHT) implications if you pass away within seven years. This is where personalised advice becomes essential.
Benefits of Using Equity Release to Support Children
- Immediate impact: Help children buy now, not years from now
- Stay in your home: No need to downsize or relocate
- Emotional reward: Enjoy seeing your gift in action
- Flexible plans: Choose how and when you release funds
Key Considerations
Before going ahead, it’s important to think carefully:
- Talk to your family: Make sure all parties understand the implications
- Inheritance impact: Equity release reduces the value of your estate
- Financial advice: Your children should also seek mortgage advice, especially when using a gifted deposit
- Repayment flexibility: Some plans allow voluntary repayments, helping to control the overall cost
Case Study: Helping a Daughter Buy in Surrey
Margaret, 67, released £100,000 from her home in Guildford to help her daughter buy a two-bedroom flat nearby. Without the gift, her daughter wouldn’t have met the deposit requirement. Margaret stayed in her home, and her Lifetime Mortgage included a feature allowing voluntary repayments, helping her manage the interest.
Get Expert Guidance
Equity release is a big decision—but when done right, it can change lives. At Connect Mortgage Services, we specialise in helping over-55s understand their options, compare plans, and ensure the move supports both their lifestyle and family goals.
We work closely with families to:
- Explain gifting rules and tax considerations
- Compare Lifetime Mortgage features
- Help children understand how gifted deposits affect their mortgage application
Final Thoughts
Helping your children onto the property ladder is one of the most meaningful legacies you can leave—while you’re still around to enjoy it. Equity release offers a powerful, tax-efficient way to make that dream a reality.
Thinking about gifting a deposit using your home’s value? Speak to Connect Mortgage Services today for clear, friendly advice on how to make it work for your family.
