Each month we come across clients in various forms that need a mortgage for a dependent relative.

Many of the dependent relative mortgages that we do involve an older parent where the existing mortgage is interested only and they are coming to the end of their mortgage term. Unlike repayment mortgages where the outstanding balance would have been cleared in situations like this the older parent who does not now have enough annual income to take a mortgage in their own name might be forced to sell their home and move into rented accommodation. Another factor to consider is the maximum mortgage term many older borrowers face?  In cases like this often a younger son or daughter could potentially use annual incomes either on a sole or joint application to borrower enough to clear off their parent’s existing residential outstanding mortgage.

Mortgage Success Reviews For Concessionary Purchase

Dependent Relative Concessionary Purchase

In situations such as explained above where the parent or dependent relative will remain in the property and continue to live in the property the majority of lenders will not be happy. Even if the person taking the mortgage meets the lenders affordability model the lender could have issues in the future if they are forced to repossess the property. For a property similar to this one, we do have mortgage lenders who accept your mortgage application depending on your loan affordability.  Also, note with a concessionary purchase no personal deposit will be required. Instead the parent or relative gifts the equity that is in the property to their son, daughter etc and that us used instead of a personal deposit.

Affordability Calculations

Unlike a buy-to-let where borrowing is for business purposes and borrowing is based mainly on rental income. A dependent relative mortgage needs to have sufficient income from either the sole or joint borrower. However, typically the applicants are younger than their older parents and the mortgage term can be extended allowing a bigger borrowing capacity. The longer maximum term can increase the maximum loan available. At the time of application, other financial burdens of the applicants have been taken into account. The monthly payment of their current mortgage, and the applicants combined income including, any shift allowance and child dependents will be assessed to work out minimum income requirements.

What relationships qualify for a dependent relative mortgage?

If the deposit is from the applicants own savings rather than a concessionary purchase as described above. Then the relationship could be any relative and a close relationship would not be required. Cousins, uncle, aunties, grand parents, ex partners, civil partners etc could qualify. However, if the deposit is not from own sources and the purchase will be concessionary then typically the relationship would need to be close such as mum, dad, daughter and son.

Can’t we just get a regulated buy to let for dependent relative?

Instead of a conventional dependent relative mortgage where the maximum loan is not based on the rental income, you could apply for a regulated buy-to-let mortgage.

The issue is that even though these are labelled as buy-to-let, they are still assessed on income for affordability. The rates for these regulated buy-to-let mortgages are usually a lot higher than a typical residential mortgage. As annual income will be assessed anyway we normally attempt to get a dependent relative mortgage agreed upon first as this gives lower mortgage repayments. To work out whether using a family buy to let mortgage providers or a mortgage for dependent relatives it is recommended to seek professional advice by using an independent mortgage adviser. An experienced mortgage broker will have up-to-date knowledge of the market as an area of niche advice borrowing limits will vary massively between lenders.

What other factors are taken into account?

As well as annual income, existing outstanding mortgage balances or mortgage payments will be factored into the affordability calculation. There is more to working out what can be borrowed than just looking at individual income and the income multiple applicable. Personal loans, and credit card commitments are factored into the affordability assessment. The affordability figure is then worked out.

The information from credit reference agencies is also factored into the decision. Bad credit, adverse credit such as CCJs, Defaults, Missed Payments will make getting a mortgage of this type much more difficult to get the mortgage application approved.

Damian Youell

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2: We will research the whole market and email you a detailed quote as well as a list of documents to proceed.

3: You upload the documents and information needed via our channel our online portal.

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Which lenders are OK with dependent relative mortgages?


Yes. The applicants own mortgage/rent is taken into account for affordability

Yes The Cambridge will consider an application for dependent relatives. The case will be assessed on an affordability basis where the applicants will need to be able to proof affordability both for their current property and the security property in question.

Yes – Max 70% LTV

Acceptable, we do have second property specific products. Max 85% LTV on repayment or 70% interest only with option of further 5% on repayment being part and part. Please speak to your BDM to discuss affordability.

Yes, subject to max 85% LTV.

Yes. Max 90% LTV

This is acceptable subject to Max 75% LTV

Where a second property is purchased for a dependent relative the maximum LTV we will lend is 75%.
Two expenditure forms will be required for each property and must show all essential outgoings to cover each household.

FCA disclaimer

Based on our online research, the above content is accurate as per the time of writing. Mortgage lender criteria and policies change regularly, so it is always better to speak to a financial adviser to get the best-updated information. It is to note that the information provided on the website is not tailored advice to every individual reader and does not constitute financial advice. All the financial advisers working with us are fully qualified to provide mortgage advice and work for organisations regulated by financial conduct authority. All the mortgage brokers in our organisation are capable enough to offer the specific advice you need.

Some of the Buy to Let Mortgage Types are not regulated by FCA. Think and research carefully before securing other debts against your property. As the loan may be secured against your it may be repossessed if you don’t pay the monthly payments. Equity released from your property will also be secured against it.

About The Author

mortgage broker damian youell

See some of Damian’s client reviews below

Damian is an experienced mortgage broker, founder of NeedingAdvice.co.uk Ltd and company director. With over a decade working as a mortgage broker he has a strong understanding of hard to place mortgage cases. With hundreds of 5 star client reviews. hundreds of repeat clients his work speaks for himself.

He started NeedingAdvice.co.uk as a one man band with the philosophy of putting clients needs ahead of his own. This ethos of offering excellent customer service has helped the business grow over the years. He gets satisfaction on getting cases pushed through to offer stage where other mortgage broker and companies have failed.

Throughout his time as an adviser he has carved out a niche area of advice helping clients with their business protection requirements too. Having helped hundreds of client with Relevant Life Policies, Shareholder Protection Insurance, Keyperson Policies and other important protection requirements of large to small businesses.

At home he is a family man and likes to spend his time with his four children and wife Lisa. He enjoys going on holidays spending time with friends and going for walks.