A long-standing client wanted to help her daughter move into a larger home, but the daughter’s income meant she couldn’t borrow enough to buy the type of property she needed on the open market.
The twist was that the mother already owned a property that was perfect for the daughter.
The problem: it was worth far more than the daughter could afford at full market value, and the mother still wished to remain living there.
This is one of those situations that looks impossible at first glance, until you know the right plan of action.
The Challenge
Affordability barrier: The daughter’s income wouldn’t support the borrowing required to purchase the property at full value.
Property mismatch: The mother’s home met the daughter’s needs, but the market value was well above what the daughter could pay.
Family goals
Mum wanted to help her daughter and was willing to sell at a reduced price.
Mum also wanted to continue living in the property.
Cost efficiency
The family wanted to avoid unnecessary costs where possible, including stamp duty.
Our Approach
Dan explored an option that many people don’t even realise exists, and that is very difficult to execute correctly without experienced advice: a purchase using gifted equity.
In simple terms, instead of the mother selling the property at full market value, she agreed to sell it to her daughter at a lower price the daughter could afford.
The difference between the market value and the sale price was treated as a gift of equity from mum to daughter.
The Solution: Gifted Equity + Strategic LTV Structuring
Dan structured the case so that:
The daughter purchased at an affordable price.
The official purchase price reflected only what the daughter actually paid (not the full market value).
The “missing” value was gifted as equity.
Mum gifted the remaining equity portion to her daughter, bridging the gap between market value and purchase price.
The gifted equity was used for deposit purposes in lender calculations.
Crucially, Dan ensured the mortgage application treated the gifted equity as the daughter’s deposit when calculating loan-to-value (LTV).
A lower LTV unlocked a better mortgage rate.
Because the effective LTV was low, the daughter qualified for a more competitive interest rate than she would have with a small cash deposit.
Stamp duty was reduced legitimately because it’s based on the purchase price.
Since the Land Registry documentation records the actual amount paid, stamp duty was calculated on the reduced purchase price, not the full market value. This saved the daughter a considerable sum.
Outcome
- The daughter was able to buy a larger, suitable property that would otherwise have been out of reach.
- The mortgage was structured around what she could genuinely afford.
- The low LTV helped secure a strong product rate, improving long-term monthly affordability.
- Stamp duty costs were significantly reduced because the taxable purchase price was lower.
- The family achieved their goal through a compliant, lender-acceptable structure and something the client would not realistically have been able to arrange without specialist guidance.
Why This Matters?
This case is a great example of the value of expert mortgage advice. On the surface, it looked like the daughter simply “couldn’t afford” the property.
In reality, the right solution wasn’t a bigger income or a different house, it was using the equity already in the family, structured correctly.
How Barlow Irvin Financial Services Helped
At Barlow Irvin Financial Services, we don’t just source rates, we solve problems. Dan’s role was to:
- identify an appropriate lender approach,
- structure the transaction correctly,
- ensure the gifted equity was treated in a way that benefitted affordability and LTV, and
- help the client avoid paying more tax than necessary through the way the purchase was recorded.
If you’re considering a family property purchase, gifted deposit, or gifted equity arrangement, getting the structure right can make all the difference.
If you need to speak to one of our award-winning mortgage experts, please get in touch with a member of Barlow Irvin Financial Services team on 01204 208 001.
As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.