To own a home is the dream of many young millennials. However, the high property prices make it difficult for the majority to get onto the property ladder.
In reality, many young people have to rely on the Bank of Mum and Dad to realise this dream. Research by Legal and General suggests that parents and grandparents will help to buy nearly 259,400 properties this year alone. Whilst this figure is lower than last year’s 316,600, it is still a significant percentage of market sales.
Despite the number of properties purchased with the help of the Bank of Mum and Dad being 20% lower than last year, the amount of money, family, and friends are willing to contribute has risen in 2019 by more than £6000, taking the total average loan to £24,100. In fact, Legal and General’s research suggests that it is not going to stop there. More than one-third of potential buyers who plan to purchase within the next few years are expecting to rely on the generosity of family members.
This puts the Bank of Mum and Dad as the equivalent of one of the biggest mortgage lenders in the UK, Nigel Wilson – Chief Executive of Legal & General – states, “The Bank of Mum and Dad continues to be the iceberg mortgage lender beneath the surface of the housing market… This year, parents, grandparents, family or friends are set to lend thousands more to fund nearly one in five house purchases”.
Although 53% of family members are using cash savings to help out loved ones, releasing money tied up in property has become the third most popular source for the funds, the research found.
For homeowners who do not have any money readily available and do not wish to downsize their home, equity release may be an option. However, with so many options to choose from, it is always recommended to seek the guidance of an independent specialist in retirement lending before making a decision.
For more information on equity release, why not speak to one of our specialist advisers to talk through your options today.
Call the Bower team on Freephone: 0800 411 8668.
*Source: Legal and General – Bank of Mum and Dad Press Release, June 2019.