Concessionary Mortgages: How to Buy With No Deposit

Saving a deposit can feel like trying to fill a bath with the plug pulled out. Rent and other expenses keep eating away at your monthly income, and then just as you think you’ve saved enough, house prices nudge up, and lo and behold the goalposts have shifted once again.

If that sounds painfully familiar, here’s some good news: there’s a route onto the property ladder that doesn’t depend on you single-handedly saving tens of thousands of pounds in cash. It’s called a concessionary mortgage/purchase.

Concessionary mortgages let you buy a property for less than it’s actually worth, usually because someone (a parent, a landlord, and even sometimes an employer) is happy to sell it to you at a discount. That built-in discount can act as some or even all of your deposit.

Below, we’ll explain exactly how concessionary mortgages work, who offers them, what they cost, the tax traps to sidestep, and how to give yourself the best shot at approval.

What are Concessionary Mortgages?

A concessionary mortgage (also called a concessionary purchase mortgage) is a home loan used when you buy a property for less than its open-market value.

The seller knowingly accepts a lower price, and the gap between the true market value and the price you pay is gifted to you as equity and serves as your deposit in the eyes of a lender.

You’ll hear a few different names for the same idea:

• Below-market value purchase (or BMV purchase)
• Gifted equity mortgage
• Discounted mortgage or below-market mortgage
• Transaction at undervalue (the more formal legal term)

Here’s the key distinction that trips people up. With a standard gifted deposit, someone hands you cash to put towards a home you’re buying at full price. With a concessionary purchase, nobody hands over any money at all, the “gift” is baked into the discounted price of the property itself. That difference sounds subtle, but as you’ll see later, it has big consequences for stamp duty.

The reason these are treated as a specialist product is simple: the lender is being asked to lend against a property that’s selling for less than it’s worth. They want to be sure the discount is genuine and the deal is above board, not a way to disguise a problem property or sidestep the rules. Get the structure right, though, and a concessionary mortgage is one of the most powerful tools available for a first time buyer.

How Do Concessionary Mortgages Work?

The mechanics are easier than the jargon suggests. Let’s walk through a quick worked example.

Imagine your parents own a property worth £300,000. They’d like to help you onto the ladder, so they agree to sell it to you for £270,000, which is of course a 10% discount.

• Market value: £300,000
• Purchase price: £270,000
• Gifted equity: £30,000 (the 10% discount)

That £30,000 of gifted equity acts as your deposit. You don’t hand over £30,000 in cash to a lender as it already exists as equity in the property. So instead of borrowing against a 100% loan, you’d apply for a £270,000 mortgage on a home worth £300,000.

Lenders calculate your loan-to-value (LTV) against the property’s full market value, not the discounted price you actually pay.

In our example, a £270,000 mortgage against a £300,000 valuation is a 90% LTV. So even though you’ve put in no cash of your own, you’re treated as a 90% LTV borrower, and 90% LTV unlocks far better interest rates than the 95% deals available to most first-time buyers who put down a 5% deposit.

In other words, the gifted equity doesn’t just get you through the door. It can push you into a cheaper rate band you’d otherwise need a hefty cash deposit to reach. That’s the quiet superpower of concessionary mortgages.

Who Can Sell You a Property Using a Concessionary Mortgage?

Not every discounted sale qualifies, and lenders are pickier about some relationships than others. With that being said, here are the main routes we tend to see…

Buying From Your Parents

This is the classic, and lenders’ favourite, scenario. Buying from parents, grandparents, siblings, aunts, uncles, or step-relatives is the most widely accepted form of concessionary purchase.

What lenders like is that the relationship is easy to verify, the motive is obvious (they want to help, not offload a lemon), and the gift of equity is genuine.

Families often do this when downsizing, selling a second home, or releasing an inherited property. It also crops up when several siblings inherit a house and one of them buys out the others’ shares at a reduced overall price.

Lenders such as Aldermore will accept inter-family discounts of up to 50% of the property’s value, which is generous compared with other routes.

However, there is one important condition when buying from family. With most lenders, the selling family member must move out on completion and can’t keep living in the property. You may see that as a negative or perhaps a massive positive, but either way you need to be aware.

Buying From Your Landlord

If you’re renting and your landlord wants to sell, buying from your landlord at a discount can be a win-win. You skip the stress of moving and receive a discount, meanwhile the landlord benefits due to:

• Avoiding estate agent fees
• Not having to go through void periods with no rent coming in
• Avoiding the faff that comes with an open-market sale

This route has become much more common as landlords continue to leave the market.

Back in 2024, Government figures from the English Private Landlord Survey showed that around 31% of landlords planned to reduce their portfolios within two years, with a chunk intending to sell up entirely. Since then, we’ve witnessed an influx of concessionary purchases via this route.

For a landlord facing months of an empty property and agent commission, offering a sitting tenant a 5–10% discount can actually work out cheaper than a traditional sale.

Lenders typically require you to have been a tenant in the property for at least 12 months before they’ll consider concessionary mortgages via a landlord, and the discount limits tend to be a little bit tighter than for family sales.

Other Routes: Employers & Developers

While almost all concessionary purchases we see tend to occur via the two routes outlined above, a few less common scenarios also exist:

• Employer sales. Occasionally an employer sells a property to an employee at a discount. Lenders are more cautious here because the relationship is less binding than family, so getting everything documented as a genuine gift is essential.
• Developer discounts. A developer might offer a home below market value as an incentive. However, lenders tend to be wary of this, often wondering whether the discount hides a problem with the property or the development.

For any of these, a survey is worth its weight in gold as a discount that looks like a steal can hide expensive surprises.

Why Concessionary Mortgages Matter Right Now

It’s worth pausing on why concessionary mortgage have become so important, because the numbers tell a striking story about how people actually buy homes in the UK today.

The “Bank of Mum and Dad” has effectively become one of the country’s biggest mortgage lenders. In fact, according to research from Savills, 53% of first time buyers received direct financial support from family through gifts, loans or inheritance in 2025, with the total amount being gifted amounting to a staggering £8.3 billion.

Why the reliance on family help? Because the deposit barrier is brutal.

The average age of a first time buyer has climbed to 34, according to research from Skipton. And that’s all because the average deposit needed by a first time buyer is a whopping £63,855.

A concessionary mortgage essentially lets someone help you over the deposit wall using equity rather than cash they may not have lying around, which is exactly why it deserves a place in the conversation for any first time buyer who’s struggling to save.

Concessionary Mortgage vs Gifted Deposit

When buying a home, a gifted deposit and a concessionary mortgage can both help you get onto the property ladder, but they work in very different ways.

With a gifted deposit you buy at full market value and a relative hands you cash to use as your deposit, whereas with a concessionary mortgage you buy the property below market value and that built-in discount becomes your deposit.

So basically one injects cash into a full-price purchase, while the other bakes the help into a reduced price; money changing hands versus equity changing hands.

However, the big difference between the two is how it could potentially impact the stamp duty bill you face.

The Difference in Stamp Duty

This is the section almost every other guide skips, and it could save you thousands of pounds, so read it twice if you have too.

When a family member helps you buy a property, the deal can be structured in two different ways, and they are not taxed the same:

1. As a concessionary purchase — the contract records the actual discounted price you pay.
2. As a gifted deposit — the contract records the full market value, with the family member “gifting” you the difference in cash terms.

The way it’s structured changes how much Stamp Duty Land Tax (SDLT) you owe, because SDLT is charged on the price stated in the contract.

Let’s run the numbers. Say your parents own a home worth £510,000 and want you to have it by either gifting you £110k or taking £110k off the purchase price.

• Structured as a concessionary purchase at £400,000: as a first-time buyer claiming relief, your SDLT would be £5,000.
• Structured as a gifted deposit  at £510,000: the contract records £510,000, you lose first-time buyer relief (it’s withdrawn above the threshold), and your SDLT jumps to around £15,500.

Same house, same family, same generosity, but a £10,000+ difference in tax purely down to how the paperwork is drawn up.

So, for most buyers, the concessionary purchase structure is far more efficient.

This matters even more since April 2025, when first-time buyer stamp duty thresholds dropped. The nil-rate band for first-time buyers fell from £425,000 to £300,000, and the maximum purchase price eligible for relief fell from £625,000 to £500,000. A first-time buyer purchasing at £450,000 now pays around £7,500 in SDLT, versus £1,250 under the old rules. With thresholds lower, getting the structure right is more valuable than ever.

Which Lenders Offer Concessionary Mortgages?

Not every lender touches concessionary purchases, and those that do all have slightly different rules. This is precisely where a mortgage broker earns their keep, matching your specific scenario to the lender most likely to say yes. Here’s a snapshot of the current landscape.

• Halifax – Must be purchased from a family member or landlord, and the discount on the purchase price must be a minimum of 10%
• TSB – Their 5&5 Concessionary Mortgage allows you to put down a 5% deposit and your landlord to then offer you a 5% discount on the purchase price to give you a 10% deposit overall
• Aldermore – Minimum 5% discount and family discounts up to 50%; landlord-to-tenant up to 25%. However, the tenant must have rented for at least 12 months.
• Nationwide – LTV is calculated using the open market value with a maximum of 90%

Lender criteria change constantly, so treat this as a guide rather than gospel, always confirm current rules before applying (or, better, let us do that legwork for you).

Do Concessionary Mortgages Cost More?

A common worry is that a “specialist” mortgage must come with a punishing interest rate. Good news: that’s largely a myth.

In most cases, concessionary purchases are priced exactly the same as a standard residential mortgage. There’s no automatic rate premium for using gifted equity.

Usually the difference between these and a bog-standard purchase lies in the lender’s criteria (who they’ll accept the gift from, how big a discount they’ll allow, and what paperwork they need) not in the interest rate.

If anything, as we covered earlier, a concessionary purchase can land you a cheaper rate than you’d otherwise get, because the gifted equity lowers your effective LTV against the market valuation.

A buyer who’d normally be stuck with a 95% deal could find themselves accessing 80% or 90% pricing instead. That’s a genuine saving, not a penalty.

How to Qualify for a Concessionary Mortgage

As with any mortgage type, you’ll face the same core checks from the lender:

• Deposit and discount size. The bigger the gifted equity, the wider your choice of lenders. If the discount is only 5%, you’ll need a lender that both accepts concessionary purchases and offers products at 95% LTV, which is a narrower field. Combining the gift with some of your own savings can open up more options.
• Affordability and income. The discount makes the home cheaper, but you still have to prove you can comfortably afford the monthly repayments. You can work out your affordability using our affordability calculator.
• Credit history. While there isn’t a single, magic credit score you must have to get approved for a mortgage, having a healthy credit score will generally make it much easier to secure one. You can check your credit score via CheckmyFile.
• The property itself. Lenders scrutinise the valuation closely, since that’s their security, and they also don’t tend to like lending money for non-standard properties (such as, properties with thatched roofs and flats in a tower block). If you’re looking to purchase a standard property that is valued correctly, your application is far more likely to be successful.

If you can tick each of those boxes, then securing a concessionary mortgage will prove far easier.

Our team of award-winning mortgage brokers have extensive experience of helping first-time buyers with concessionary purchases. You can book your free, no obligation appointment with one of them today by clicking here.

Pros & Cons of Concessionary Mortgages

A concessionary mortgage sounds perfect, right? Well, like anything, it’s not all upside. So, here’s the balanced view.

The Pros

• You can buy without saving a large cash deposit
• The gifted equity lowers your LTV, often unlocking better interest rates.
• You get on the ladder years sooner than you would by saving alone.
• For landlord and family sales, the process can be smoother and cheaper (no chain, no estate agent).
• A smaller mortgage means lower monthly payments and less interest over the term.

Read through that list and you’d think concessionary mortgages are literally perfect. I mean come on, buying with no deposit, what’s not to love. Well, it’s important that you also consider the potential downsides, so don’t skip over this next bit.

The Cons

• Potential tax implications (inheritance tax and capital gains tax) that need planning.
• The seller must usually move out and can’t retain a benefit.
• If the discount reflects a property problem, you could inherit that headache.

Let’s explore the tax implications in slightly more detail, as you absolutely don’t want to be caught out by these…

Inheritance Tax

When a family member sells you a property below value, the discount counts as a gift for Inheritance Tax (IHT) purposes. If the person who gifted the equity dies within seven years, that gift may be pulled back into their estate and could be subject to inheritance tax on a sliding scale.

There’s an important wrinkle: to remove the gift from their estate, the seller generally must not keep benefiting from the property, for example, by continuing to live there.

HMRC calls this a “reservation of benefit.” Brief visits are usually fine, but a seller who effectively still lives in or regularly uses the home could find the whole gift stays in their estate for inheritance tax.

This is exactly the sort of thing worth checking before completing. Fortunately, we’re partnered with a wealth management firm who deal with situations like this, so we can set up a joint appointment to ensure everything is done correctly.

Capital Gains Tax

If the property being sold isn’t the seller’s main home (a second home or a rental, say), they may face a Capital Gains Tax bill.

This is what you pay on the profit you make when you sell something for more than you paid for it, like stock, property, or crypto. It only kicks in when you actually sell (not while the asset just sits there gaining value), and the rate often depends on how long you held it.

If the seller will face a Capital Gains Tax bill, HMRC will usually base this on the market value, not the discounted price.

Step by Step Guide to Getting a Concessionary Mortgage

Here’s what the typical journey looks like when purchasing a property with a concessionary mortgage:

1. Confirm the discount and relationship. Establish who’s selling, how big the discount is, and that everyone’s clear it’s a genuine gift of equity.
2. Get advice early. Speak to a mortgage broker and, where tax is involved, a tax adviser, before anything is committed to paper.
3. Check your credit and budget. Review your credit files to ensure everything looks correct and get a realistic sense of what you can afford. You can use CheckMyFile and our affordability calculator to do these.
4. Secure an Agreement in Principle with a lender suited to your scenario.
5. Instruct experienced solicitors (separate ones for buyer and seller) who’ve handled concessionary purchases.
6. Complete the paperwork — gift declarations, indemnity insurance where needed, and the formal application.
7. Get your mortgage offer, complete, and move in.

We’re here to help you understand your credit history, establish your budget, secure an agreement in principle, liaise with solicitors, complete the paperwork, and get you your all-important mortgage offer

Ready to Explore Your Concessionary Mortgage Options?

Here’s the honest truth: concessionary mortgages are brilliant when they’re set up properly, and a headache when they’re not. The right lender, the right structure, and the right paperwork can be the difference between thousands saved and a deal that stalls.

That’s exactly where we come in. At The Levels Financial, we’ll look at your specific situation (whether you’re buying from parents, buying from your landlord, or weighing up a below-market value purchase from someone else) and tell you straight what’s possible, which lenders fit, and how we’ll structure it for the best outcome.

There’s no pressure and no jargon. Just a free initial chat to explore your options and show you what could be within reach. If a concessionary purchase could get you onto the ladder sooner, we’ll help you make it happen.