News

Bank of mum and dad

With the property market moving as fast as ever first time, buyers still struggle to get on the market and the ‘bank of mum and dad’ is now ranked as the 10th biggest UK mortgage lender.  Compared to a high street lender, the bank of mum and dad can have more favourable terms for lending, making them the more attractive, or only, option for many.

With the average age of the first-time buyer now reported as thirty three, it is no surprise that many need to turn to their parents for help. Legal and General have stated that parents will lend £6.5 billion this year to their children resulting in a 26% share of the UK property transactions.  This figure has increased by £1.5 billion compared to the same survey a year ago.  One quarter of home owners say they have received assistance from their parents to buy and for under thirty fives this rises to almost two thirds.

The bank of mum of dad doesn’t just end there.  Parents are also involved in the rental market, contributing to one in ten rents paid in the UK, helping with a security deposit, moving expenses,  and letting agent fees. It is no wonder they are now ranked as the tenth biggest lender in the country. The generosity even extends to include grandparents helping their grandchildren to get on the property ladder.
Whatever option we choose it is both important and fair to all involved to ensure the assistance provided is recognised.  The terms of the loan should be laid out from the start -  is it a loan or a gift? What are the repayment terms, if any?  Who are the borrowers?? If it is a couple, what happens in the event of separation?

Paris Steele can provide further advice and assistance in relation to any of the issues raised in this article.