UK home deposits taking seven years to save

Helping others buy a home: financial options

Written in line with our editorial policy.

With deposits taking years to save and the rising cost of living, helping a loved one to buy a home can make a real difference. From gifting money to remortgaging, there are several ways to offer support, each with its own financial considerations.

UK workers now need seven years to save for the average home deposit of £36,678, research from Vanquis has found. This problem is exacerbated by how little some people are saving. 

Vanquis point out that the average savings rate of just 1 per cent of monthly income was in stark contrast to the 50/30/20 savings rule. This method advocates spending 50 per cent of income on needs, 30 per cent on wants, and 20 per cent on savings and debt repayment.

The recent period of higher inflation and interest rates have made it even more difficult for some prospective homeowners to save enough for a deposit and afford the mortgage repayments. The rising cost of living means that many people are struggling to set aside money each month, and getting onto the property ladder may seem an impossible feat for some. 

Latest figures from the UK House Price Index reveals that in January 2025, the average house price was £268,548. That’s a monthly rise of 0.2%, and a 4.9% increase on the previous year.

How can you help others to get onto the ladder?

For anyone wanting to help loved ones such as children or grandchildren onto or up the property ladder, there are several options available.

Gifting a deposit from savings

If you have enough savings, gifting money towards a deposit can give someone’s deposit savings a significant boost. This is one of the most straightforward ways to help, but it’s important to be aware that large gifts may have inheritance tax implications if you pass away within seven years of making the gift.

Lending them the money

If you’re unable to gift the money outright, you could consider lending it to your child instead. However, it’s crucial to clearly outline the terms of the loan, including repayment expectations and whether any interest will be charged, to avoid misunderstandings in the future. Putting the agreement in writing can help prevent disputes down the line. 

Bear in mind also that lenders will need to know about the loan, and that could affect the mortgage application.

Equity release

For homeowners aged 55+, a lifetime mortgage can be an option to access tax-free cash from your property to spend however you wish, including helping your loved ones buy a home. 

Gifting money is one of the most common uses of equity release, with some homeowners arranging a plan as a means of intergenerational wealth transfer. It’s essential to understand the long-term implications, including how equity release will reduce the amount of inheritance you leave. 

Read more about using equity release to help first time buyers here.

Acting as a guarantor

You may be able to support someone’s mortgage application by acting as a guarantor, using your savings or property as security. This can improve their chances of mortgage approval and potentially allow them to borrow more. However, if they fail to keep up with mortgage repayments, the guarantor is legally responsible for covering the costs. 

Additionally, guarantor mortgages may come with higher interest rates than standard deals, so it’s essential to weigh the risks and seek financial advice before committing.

Remortgaging

If you have a mortgage on your own property, you could consider remortgaging to release equity and provide financial support. This could involve increasing the size of your mortgage and potentially extending its term to free up extra cash. 

It’s important to consider how this aligns with your own financial goals, as increasing your borrowing could impact your standard of living and retirement plans. Seeking financial advice may help you decide if this is the right move for you.

Making a decision that suits you and your family

We all want to help our loved ones achieve their financial goals – and helping your child or grandchild afford their purchase can take a huge amount of financial pressure off their shoulders. 

Each of the above options has its pros and cons, so it’s important that you assess your financial situation carefully before making a decision. If you’re unsure, speaking to a financial adviser can help determine the best way to support your child without putting your own financial security at risk.

Explore equity release with a specialist

If you are a homeowner aged 55 or over and thinking about unlocking a cash lump sum from your home to gift to loved ones or spend however you wish, get in touch with our selected advisers today. As part of the process, they will be able to check how much you could unlock, answer all of your questions and explain all the pros and cons of equity release.

Call our friendly team free on 0808 178 3055 to get started or request a call back at a time convenient to you.

Sources

UK workers now need seven years to save for the average home deposit of £36,678: UK workers save 7 years for home deposit. FT Adviser. Accessed 01 April 2025.

In January 2025 the average house price was £268,548: UK House Price Index. Accessed 01 April 2025.

About Richard Groom. A writer with 20+ years’ experience across several sectors including financial services, Richard has a passion for writing clear and simple content on even the most complex of subjects. In his spare time, Richard loves exploring the hills and mountains of the UK on long walks with his faithful cocker spaniel. Follow Richard on LinkedIn