The Bank of Mum and Dad is set to become one of the highest mortgage lenders in the UK.
With first time buyers struggling to stay on top of their mortgages and house prices expected to soar over the coming years, more and more young people are turning to their parents and family for financial help. According to research from Legal & General, parents will lend their children over £5 billion in 2016. The average financial contribution from “The Bank of Mum and Dad” will be around £17,500 which is 7% of the average cost of a home.
Relying on Parents
This means that the Bank of Mum and Dad will finance 25% of all UK mortgages, placing the finance method among the country’s top 10 mortgage lenders. Cheap or affordable housing is becoming increasingly scarce, so for many young people to be able to buy their first property, parental or family help is needed. This could result in problems for parents and families however, as The Independent points out:
“In London, homeowners with assistance got an average of 6.2 per cent of their property's value from family and friends. That's an average of 51 per cent of the family's net wealth, which poses a risk as parents overstretch themselves to help their children get on the property ladder”.
Are you or your children looking at buying a new house? Our advisers here at Charles James work with you to tailor the best mortgage option for your circumstances and your perfect home. Please get in touch if you would like more information.