Not quite sure what was so different about this morning compared to most others, but for the first time in at least three years, I decided to put the TV on whilst getting ready for the first day back after the August Bank Holiday weekend.
In between the headline news of North Korea firing a missile over Japan, and the devastating flooding in Houston, Texas, there was a piece on Sky News about the “Bank of Mum and Dad”.
According to the news 34% of first-time buyers relied on their parents for financial help, making the bank of mum and dad’, the equivalent of the UK’s ninth largest lender in 2017. The money will help to buy £75bn worth of property and puts parents on a par with the UK’s ninth largest mortgage lender, the Yorkshire Building Society.
Is your rent too high? Ask Bank of Mum & Dad.
The “Bank of Mum and Dad” has made the news again this week as it is reported that they not only help their children buy property, they are also now being called upon to help with their rent
Research shows that parents will fund £2.3billion for rent for their offspring in 2017 – paying out £415 for each rental payment on average.
The Bank of Mum and Dad now helps 9 per cent of renters across the UK with their financial commitments to their landlords on nearly 460,000 properties, research from Legal & General revealed.
No wonder this is the case as their children are part of the group of people known as ‘generation rent’. Hopes of buying a home for this group of people are almost gone as the heavy burden of living costs and rent make it impossible to save enough money for a deposit.
Is the Bank of Mum & Dad Sustainable?
The bank of mum and dad makes an average financial contribution of £21,600 for the purchase of each property. And of the buyers who received support from their family, 57% received it in the form of a gift while just 5% were given the money as a loan with interest.
According to Legal and General a loan by the bank of mum and dad could wipe out just over half of a family’s available net wealth, raising the question of whether this type of support is sustainable over the longer term.
Your home may be repossessed if you do not keep up repayments on your mortgage.
If you’re looking to buy your first house with help from your family, we can help you find an appropriate mortgage deal for you.
If you’re still in the process of saving your deposit (typically 16% of the value of an average first home), we can help you explore the different ways to invest for your near, mid and long-term plans.