Bank of Family foot the bill to get young people on housing ladder

There’s growing evidence that wider family members - not just Mum and Dad - are stumping up cash to help younger people get on the property ladder.

A survey by Legal & General shows that some 42 per cent of all parents and grandparents aged 55 and over have come up with the cash to help younger family members purchase a home. To meet these significant costs, many have used a combination of their savings (68 per cent), investments (22 per cent) and even their pension (14 per cent), but some parents and grandparents have also made use of their own property wealth to help family members.

There is more than £3.5 trillion in housing wealth held by the nation’s over 55s and an increasing number of parents and grandparents are turning to this to unlock support, claims L&G. 

Some 18 per cent have used their own home to generate the money their loved ones need to make a purchase via equity release, downsizing or re-mortgaging. Among Legal & General Home Finance’s own customers, for instance, in the last year 11 per cent took out a lifetime mortgage to make a financial gift to a family member.

Parents and grandparents who gift will provide significant sums of money, with prospective homeowners who benefit receiving £25,600 in support on average.

And it’s not just direct financial support that’s being provided. A third of parents and grandparents have allowed adult children to move back home while saving for a deposit, avoiding an estimated £24,900 in outgoings.

Craig Brown, chief executive of L&G Finance, says: “For families across the country, property is often one of the most significant financial assets they have. We know that many parents and grandparents feel there is no better use of that asset than to provide for the future of their loved ones, helping many younger people overcome the huge challenge of getting on the first rung of the property ladder.

“However, it’s really important people take a considered approach when providing support like this. Our research shows many parents and grandparents do not seek any guidance or advice before parting with significant amounts of money, unless of course it’s a requirement of the product, as with lifetime mortgages. This is a big decision and people should carefully consider how and what they gift to ensure they don’t risk their own financial difficulties later in life.”