Purchasing a home from a family member can be a practical way to get onto the property ladder or move home. The buying process is broadly the same as any other property purchase, although lenders and solicitors may need more information about how the sale has been agreed.
Purchases like these often involve arrangements such as buying below market value or using gifted equity, both of which we regularly come across when helping customers in Manchester. Understanding how these arrangements work before you apply for a mortgage can help make the process much smoother.
How Is It Different?
Buying from a family member doesn’t change the fundamentals of purchasing a property. If you’re taking out a mortgage, you’ll still need to meet a lender’s affordability criteria, the property will usually need to be valued, and a solicitor will carry out the legal work before ownership can be transferred.
The main difference is that family purchases can be more flexible than buying on the open market. Rather than agreeing to a sale at the property’s full market value, a family member may decide to sell for less or help you purchase the property by gifting some of their equity.
While these arrangements can make buying a home more affordable, they also mean your lender and solicitor will want to understand exactly how the purchase has been structured.
Buying Below Market Value
Buying below market value means purchasing a property for less than its current market value.
For example, a home worth £300,000 may be sold to a family member for £270,000. Although the purchase price has been agreed privately, your mortgage lender will usually rely on an independent valuation when assessing your application.
Buying below market value can reduce the amount you need to borrow and, depending on the lender, may also reduce the amount of cash you’ll need as a deposit.
Not every family purchase involves a discounted sale, but it’s one of the most common reasons these transactions differ from a standard property purchase.
Gifted Equity Explained
When a property is sold below its market value, the difference between the valuation and the agreed purchase price is known as gifted equity. It works similarly to a gifted deposit.
Instead of providing this amount as cash, the family member effectively transfers part of the property’s value to you. In many cases, lenders can treat this as all or part of your deposit.
Every lender has its own criteria, so gifted equity isn’t assessed in exactly the same way across the market. Some lenders are happy to accept it as the full deposit, while others may still expect you to contribute some of your own savings.
Your solicitor will also need to confirm that the gifted equity is a genuine gift and that it doesn’t need to be repaid.
Getting a Mortgage
Applying for a mortgage when buying from a family member is much the same as applying for any other purchase.
Your lender will assess your income, regular outgoings, and credit history before deciding how much they’re prepared to lend. They’ll also arrange a valuation to confirm the property’s market value, regardless of the agreed purchase price.
If the purchase includes gifted equity or another family arrangement, you may be asked to provide additional documentation so the lender has a clear understanding of how the transaction will work.
As lender criteria can vary, it’s often worth discussing your circumstances with a mortgage advisor before submitting an application. This can help identify which lenders are most likely to accept the way the purchase has been structured.
The Buying Process
Once you’ve agreed on a purchase price with your family member, the buying process follows the same stages as most other property purchases.
If you’re using a mortgage, you’ll submit an application before your lender arranges a valuation of the property. At the same time, your solicitor will begin the legal work, carry out the necessary checks, and prepare the contracts.
If gifted equity forms part of the purchase, your solicitor will deal with the additional documentation needed to record the arrangement correctly.
Once your mortgage offer has been issued and the legal work has been completed, contracts can be exchanged before a completion date is agreed.
Preparing Your Mortgage Application
The way a family purchase has been arranged can influence which lenders are available to you and what information they’ll ask for during your application.
Understanding this before you apply can help you choose a suitable lender, prepare the right documentation, and avoid unnecessary delays once your application is underway.
If you’re buying a property from a family member, speaking to a mortgage advisor early can help you understand how different lenders are likely to view your application.
Whether the purchase involves gifted equity, a discounted sale, or a straightforward transfer, our mortgage advisors in Manchester can help you find a mortgage that’s suited to the way your purchase has been arranged
Date Last Edited: September 3, 2026
