The Bank of Mum and Dad keep growing to become a £6.5bn UK Mortgage Lender on a par with the 9th largest UK lender. It continues to grow in importance in helping young people take their early steps onto the housing ladder. It will be involved in more than a quarter of all property transactions that take place in the UK year.
Research by the insurance company Legal & General and published in conjunction with the Centre for Economics & Business Research highlighted the major role that families play in the mortgage market. Their research reveals how parents, family and friends will provide deposits for over 298,000 new mortgages.
How parents and grandparents are helping with mortgage deposits.
After years of rising house prices and slow wage growth, homeownership is out of reach for even more buyers.
In 2017 over a quarter of prospective homeowners received financial help to buy from friends and family. This form of financial assistance is now considered the norm with over forty-two per cent of prospective first-time buyers expecting to get some help.
The under 30’s are the biggest recipients of this type of financial funding, with nearly four-fifths receiving these hand-outs. Add in those under 35, and the figure rises to 92%.
With so many young people relying on family or friends when buying their current home. Anstee & Co.’s financial advisers are highly sensitive to the role of the family unit when it comes to property sales and purchases.
Peter Anstee from Anstee & Co said-
This research confirms what many of us have been feeling. Our children have become more dependent on the older generation to support their housing dreams. This has the potential to lead to some tough conversations. The role of our expert mortgage advisers can be key, supporting and guiding parents who want to help their children. While also looking at the issues from the children’s perspective, who have their heart set on that dream home. It’s important that each party understand the emotions of money.
So how can our financial advisers help?
For now, the Bank of Mum and Dad (and Grandma and Granddad) appears well capitalised and we believe there is a clear opportunity for our financial advisers to help the older generation understand how best to use their available resources. For themselves and their loved ones.
The Bank of Mum and Dad is a caring bank, and will generally try to do more. We have seen the use of equity release grow over the years as families stretch their resources to help their loved ones onto the property ladder.it is important that the lender and borrower need to be financially protected and aware before committing to significant monetary arrangements.
Our financial advisers, therefore, need to make sure the right balance is found between parents and family members. Helping children buy their first home and their own financial security. Insurance levels may need to be reviewed both life and critical illness. Any later-life lending or gifts will impact on income and tax planning. For the children, areas like home and contents insurance, life insurance and critical illness cover will be vital as they make the leap from ‘Generation Rent’ to becoming a homeowner
Contact us today.
Whether you are parent, grandparent, friend or first-time buyer, contact us today to arrange an appointment. We have advisers based in, Kettering, Wellingborough, Northampton, Stamford and Bedford. Meetings can be at your home at a time convenient to you. Alternatively, you can call our offices in Kettering, Stamford or London. We also have meeting rooms in Bedford and Warwick.
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