From first-time buyer to family strategy

It’s clear there are many challenges facing today’s UK housing market, particularly for first-time buyers. Many are contending with rising deposit requirements, high rental costs that limit the ability to save and stricter affordability assessments.

Second-time buyers face similar pressures. Stamp duty, childcare costs and higher interest rates can restrict affordability, while slower house price growth may limit the equity available to move to a larger or more desirable home.

Alongside this sits another important dynamic: a significant proportion of property wealth in the UK is held by homeowners aged 55 and over. Many are mortgage-free, financially comfortable, and keen to support children or grandchildren at key life stages.

This is where later life lending can play a role within a broader, more structured family wealth conversation that supports both generations and aligns with longer-term planning. In practice, this support often happens informally. Without regulated advice, however, these arrangements can be inefficient, tax-ineffective or lead to unintended outcomes.

Bridging the advice gap

Mortgage advice and later life lending have traditionally been viewed as separate areas of advice. But in reality, decisions are often interconnected. A parent’s home wealth and a child’s ability to buy or move home may be closely linked.

A joined-up, advice-led approach can help deliver better outcomes across generations, while making sure recommendations are suitable, informed and compliant with FCA expectations.

Case study – a coordinated family approach

Consider a family where the parents are in their late sixties, living in a property valued at £850,000 with no outstanding mortgage. They have stable pension income, are comfortable financially, and would like to help their child, while also keeping in mind their estate planning. Their child has saved £40,000 but needs £80,000 to access a suitable loan-to-value (LTV). High rent, day-to-day living costs and affordability assessments mean they are finding it hard to save.

Without advice, families in this situation may delay purchasing a home, take on higher LTV borrowing, or provide informal support without fully understanding the potential tax or estate planning implications. But with regulated advice, and where appropriate, a lifetime mortgage could allow the parents to release capital to support a gifted deposit, retain a contingency reserve and factor longer-term planning into the decision. Any tax considerations would be addressed by an appropriately qualified specialist.

For the child, this approach can improve LTV positioning, increase access to a broader range of mortgage products and support overall affordability. For parents, it can provide controlled access to housing wealth, flexibility through a contingency cash reserve. However, it should be remembered that taking out a lifetime mortgage will not always be suitable and it will reduce the amount of inheritance the parents will be able to leave to their children.

Supporting second-time buyers

The same principles can also apply to second-time buyers who are struggling with a deposit gap when moving home. Where suitable, accessing money from the family home can help improve LTV, widen product choice and reduce the need to stretch affordability at a time when household costs are already under pressure.

An advice opportunity, handled responsibly

If advisers don’t consider later-life lending for families, there’s a chance they may seek support elsewhere. In turn this can fragment advice relationships with clients and lead to less consistent outcomes. By incorporating or facilitating later life conversations at the right time, advisers can support Consumer Duty requirements, strengthen family relationships and build longer-term, intergenerational trust.

Addressing risks and sensitivities

Later life lending won’t be suitable in every case. Advice must consider all available alternatives, the cost of borrowing, clearly explaining the impact of compound interest, assess vulnerability, financial resilience and the impact of financial strain in later-life, involve family members where appropriate, and outline the potential effects on the estate. Independent legal advice should always be taken to make sure clients are fully informed and comfortable with their decisions.

A joined-up approach to family advice

Where suitable, later life lending can form part of a joined-up approach to intergenerational planning. Advisers who recognise the interconnected nature of family finances are well placed to support better client outcomes and build sustainable, long-term relationships with clients.

Find out more

Find out how Aviva’s equity release products can support joined-up family advice, and use the Lifetime Mortgage Calculator to explore potential outcomes and support client conversations.