Bank of Mum & Dad ‘one of UK’s biggest lenders’
The ‘Bank of Mum and Dad’, where families (and friends) contribute to help others get onto the property ladder, is becoming increasingly generous. Recent research has found the average contribution has increased by more than £6,000, to a huge £24,100.
The total lending adds up to £6.3billion in 2019, making the Bank of Mum and Dad the 11th largest mortgage lender in the UK. The ages of those receiving support are rising too, with 22% of 45 to 54 year olds having received help with their most recent purchase.
This support is given, in 59% of cases, as a gift, so there is no requirement to repay the funds. Only 6% of respondents were charged interest if the amount was repaid.
Funds are predominantly coming from cash reserves (53%) while 21% took the money from ISAs. Many of these nest eggs are the result of plans made in advance. Some ‘lenders’ are borrowing to pass on the money, downsizing or cashing in pensions to help out.
More than a quarter of ‘lenders’ are not confident that they will have enough to live on in retirement after their generous deed.
If you’re considering becoming a lender or a borrower through the Bank of Mum and Dad, the report makes interesting reading. We would strongly recommend that you seek advice from a Financial Advisor to ensure that you have a clear retirement plan, and before investing or gifting any significant sums.