Bank of Mum and Dad: How Equity Release Can Help Your Family

Introduction

Are you considering using equity release to help your child or grandchild get onto the property ladder? That’s understandable. 

According to the latest Savills report, 52% of first-time buyers have turned to family lending (intergenerational wealth) to raise a deposit and achieve their dream of home ownership.

Stagnant wages, soaring property prices, high-cost rents, higher lending rates, and stricter lending criteria mean many young people need a crucial lifeline from the Bank of Mum and Dad or Bank of Granny and Grandpa.

At Tivoli Legal, we know that you want to help your loved ones achieve their dreams while also considering your financial future.

That’s why we’ve written this guide. We’ll explore the various ways you can offer support, detail the legal and financial considerations, and share real-life stories to highlight the positive impact of family lending.

What Is the Bank of Mum and Dad?

The “Bank of Mum and Dad” refers to parents, and sometimes grandparents, offering family financial support to help younger generations get on the property ladder. 

In fact, this trend has further developed in the UK financial landscape with another term: ROGERS, ‘Reliant On Grandparents and Equity Release’. This highlights how equity release is increasingly becoming a popular way for parents to provide financial support for their family from the wealth (equity) within their property while still retaining the ability to live in their homes.

The need to turn to the Bank and Mum and Dad reflects growing economic pressures that make home ownership challenging for many first-time buyers. As a result, family assistance has become a key part of the modern property market.

This support can come in many forms: 

• An outright gift.
• An informal loan.
• Acting as a guarantor. 
• Joint property purchasing.

Then there is equity release.

Increasingly, some homeowners are choosing to unlock money from the value of their own home to allow family members to invest their inheritance during the giftor’s lifetime. While this can be a practical solution, it won’t be ideal for everyone, and it’s a complex subject.

We’ll go into more detail about this next.

Understanding equity release for family lending

Equity release has become an increasingly popular option for homeowners aged 55 and above to support their families financially. However, it’s not a process you can complete on your own.

For families considering equity release, getting the right advice is crucial to ensure the arrangement protects everyone involved and aligns with your long-term financial goals.

Your first step will be to consult a financial adviser. They’ll talk you through your available options and whether it’s right for you. If equity release makes economic sense, your adviser will discuss the various plans available. They might also suggest a solicitor. However, it’s important to know that you have the right to choose your own legal representative.

Key benefits of using equity release for family support

Equity release can be a practical and flexible way to help ease your family’s financial struggles, but there’s more to it than that.

Some of the benefits include:

• Accessing tax-efficient wealth transfer options: Equity release allows you to pass on a percentage of your wealth without selling assets or dipping into savings. It is also tax-free.
• Financial support for your family: Helping children or grandchildren onto the property ladder by enabling them to pay for a deposit.
• Maintaining financial independence while supporting family: You’ll continue to live in your home as usual without risking your financial stability. 
• Potential inheritance tax planning benefits: With expert legal advice, equity release can be a valuable part of your estate planning strategy that benefits you and your family by reducing your estate and transferring value to your family during your lifetime.
• Building family wealth by facilitating family members to invest in their own homes earlier than they would otherwise be able to afford.
• Pleasure of seeing your family spend their inheritance wisely during your lifetime.

Legal and financial considerations

At Tivoli Legal, we’re committed to providing clear, jargon-free advice that empowers you to make confident decisions about equity release. We help you understand the legal and financial implications involved, so you can make the right choice for your circumstances, both now and in the future.

We’ve detailed some of these considerations below:

Tax implications 

• Inheritance tax and gifts: If the giver sadly passes away within seven years of making a gift, it may be subject to this tax (on a reducing tapered basis)
• The seven-year rule for tax-free gifts (Potentially Exempt Transfer): When you give gifts more than seven years before passing, they often avoid inheritance tax. This gives you a tax-efficient way to transfer wealth. 
• Impact on means-tested benefits: If you’re receiving a lump sum through equity release, this may affect your eligibility for means-tested benefits, such as Universal Credit or Council Tax reductions. To understand more about this, we encourage you to read this helpful article from Saga and to talk to your Financial Adviser regarding any concerns.

Professional advice

Once you have seen a financial adviser and chosen a suitable product, it’s time to find a specialist equity release solicitor. These professionals will identify any issues that could delay equity release and complete all areas of equity release conveyancing, including drafting formal legal agreements for loans or gifts. 

In the meantime, if you have questions or would like to talk through any of the legal aspects of equity release, we’re here to help. We offer a complimentary initial consultation to provide you with personalised guidance, free from pressure, and delivered with honesty and compassion. 

Practical approaches to family lending with the Bank of Mum and Dad

There are several equity release options you can choose from, but there are other ways to help your family, too.  

Here are some of the most common methods:

Different lending models

• Lifetime Mortgages: This type of equity release allows homeowners aged 55 or older to borrow money against their home’s value. Interest compounds every month IF not paid, and homeowners retain full ownership. The loan is repaid when the homeowner passes away or goes into long-term care. 
• Home Reversion Plans: This equity release model allows you to sell all/part of your home to a provider. In exchange, you can choose a lump sum or receive regular payments.
• Interest Only Mortgages (RIO & TIO): These options let you pay just the interest each month, making monthly payments lower. With a Retirement Interest Only (RIO) mortgage, you pay interest for life, and the loan is repaid when you pass away or move into care. Term Interest Only (TIO) mortgages let you pay interest for a set period, but you’ll need to have a repayment plan and retirement income to service the payments. Both RIO and TIO mortgages require credit and affordability checks.
• Joint Property Purchase: Here,  two or more people buy a property together. They then share ownership and financial responsibility for the mortgage.
• Family Offset Mortgages: This allows a family member’s savings to offset the borrower’s mortgage balance. This reduces interest payments and allows the homeowner to keep their savings.

Your financial adviser can help you decide which is best for you.

Bank of Mum and Dad equity release case study

Keeping family together: How Tivoli Legal helped Mrs C support her loved ones with equity release

When Mrs C approached Tivoli Legal, she wanted to help her recently divorced son and young grandchildren stay close by, without sacrificing her own independence. By working with our equity release specialists, Mrs C was able to unlock funds from her home and gift them to her son—enabling him to buy a new family home just around the corner. 

The process was completed in 10 days, allowing her grandchildren to remain near their school and family, while Mrs C continued living in her cherished home. She not only secured her family’s future but also took steps to reduce her potential inheritance tax liability.

As Mrs C put it:

“The process was stress-free and completed within 10 working days. But the real reward was being able to enjoy time with my grandchildren in their new home – not years later, but right now.”

Read the full case study here. 

This story shows how equity release can offer practical, flexible support for families—helping loved ones today, while safeguarding your own independence and financial wellbeing.

FAQs about equity release and the Bank of Mum and Dad

Conclusion

As the stats show, younger generations are increasingly turning to the Bank of Mum and Dad to get a deposit for their first home. And while it can be the right decision for some, you need personalised legal support that protects your future financial wellbeing and identifies potential problems before they occur.

At Tivoli Legal, we realise these decisions aren’t just about money. They’re about family, security, and peace of mind. Our experienced and approachable team is here to guide you through the legal side of family lending and equity release, allowing you to move forward with confidence.

Thinking about how the Bank of Mum and Dad could work for your family? Get in touch with our friendly team today for tailored advice and support throughout.