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Boost your deposit

With ‘additional borrowing’ a family member could gift you money towards your deposit without touching their savings.

What does ‘additional borrowing’ mean? 

Additional borrowing is when a family member borrows more money on their own mortgage to give you money towards your own deposit. This is known as additional borrowing for a gifted deposit or ‘deposit booster’. It can come from your grandparent, parent, sibling, child, grandchild, or a legal guardian.  

The deposit is given as a gift which means you are not expected to repay the amount back to your family member. 


A family member could:

  • borrow more on a Principality mortgage
  • borrow more on a mortgage with another lender
  • take out a small mortgage on a property they own outright

Here's how it could work: 


Let’s say you are looking to buy your first home for £120,000. You have saved £6,000 but would like to have a 10% deposit. Your parent has agreed to borrow £6,000 on top of their current mortgage to help you. 


They have a Principality mortgage product and their current mortgage balance is £150,000. By gifting you £6,000, their mortgage loan would increase to £156,000. They would repay that additional amount over their mortgage term.  

The money would be released for you to put towards your mortgage deposit.  

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What are all applicants agreeing to?

It’s important that everyone involved understands what they’re agreeing to. You should all consider getting independent legal advice.

  1. Everyone involved agrees the deposit is a gift and doesn’t need to be repaid  

  2. Everyone involved agrees to sign a form confirming the deposit is a gift

  3. Everyone involved agrees the applicant is the sole owner of the property

  4. The family member agrees to repay the additional amount they borrow 

How does it work if you’re a family member helping? 

If you want to help a member of your family with their deposit, but don't have savings to spare, you can borrow a small amount against your home.

Here are some things you need to know.

If you’re helping someone buy their first home, you should get in touch with us before they make a formal application. It may be a good idea to both attend an appointment with one of our mortgage experts who will be able to explain all the options to you both before proceeding with an application. 


If you’re taking out a new mortgage, or coming to us from another provider, it's a good idea to allow plenty of time to complete the application. The sooner you talk to us, the better. 

Once you and your family member have passed our mortgage checks, we will process your application. We may need to ask for some documents from you both. We'll let you know once your mortgage is ready to complete.

The money for the deposit will be released at the same time as your mortgage application is accepted.

There are 2 ways you can borrow more on your mortgage to gift to a family member as a deposit booster. You can:

  • talk to us about your options for borrowing more if your deal is coming to an end and you want to remortgage with us
  • take out an additional mortgage at any time

You can:

  • switch to Principality when your current mortgage deal ends
  • switch to Principality before your deals ends if you current mortgage allows this and you are happy to pay any charges

If you remortgage to us, we’ll talk you through your options for borrowing a little extra to gift to a family member as a deposit booster.

You can take out a new mortgage to release funds to gift to a family member as a deposit booster.

If you're applying for ‘additional borrowing’ as the family member helping your mortgage could be impacted.

Repayments 

The additional borrowing is secured against your property. If you already have a mortgage it will increase the amount you owe, this could:

  • mean you pay more each month
  • increase the total amount of interest you pay back over time  
  • impact the loan to value of your home which could affect the mortgage products available to you
Loan to value 

The family member looking to borrow more would also need to make sure their current mortgage balance and the additional amount they wish to borrow does not exceed a set loan to value (LTV). LTV is the percentage of your home's total value that you borrow as a mortgage.



The thresholds are: 

  • 90% LTV for residential properties 
  • 75% LTV for buy to let or holiday let properties 
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Next steps

Compare our mortgage products or get in touch with our mortgage experts. 

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Your home may be repossessed if you do not keep up repayments on your mortgage.