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Thanks Mum & Dad, we love you

For those who do not know London, Camberwell, at the eastern end of Southwark Borough, has for many years been rather forgotten by the gentrification that has been enjoyed by its near neighbours, Brixton and Peckham.

But now, due to improvements in the train transport infrastructure in the Borough and with promises of more to come as the Underground extends early next decade – Camberwell has posted rising property sales figures.

And, according to the FT, the Bank of Mum & Dad (aka Bomad) is coming into play as parents help their young professional children snap up starter, often refurbished properties.

Bargain-hunting, as all canny parents do, has proven to pay off as Camberwell’s one and two bedroomed properties are being acquired at ten or even 15 per cent discounts to their equivalents in neighbouring boroughs. What happens in the future is anyone’s guess. Who knows if prices in Camberwell continue to sell at a discount? They may even go down. The golden rule of house buying, with our without parental help, is knowing that you will be happy to stay there in the long term irrespective of what the market does. First and foremost, it’s a home, not an investment.

Now, we know that Bomad, were it a high street lender – would be in the top ten of lenders as it was measured last year to have lent £6.5bn to its young people, up from £5bn in 2016.

https://familybuildingsociety.co.uk/Blog/bank-of-mum-and-dad-top-ten-lender.aspx

Brett MacDougall, a partner in estate agents Hunters Camberwell, told the FT this week: “The Bank of Mum and Dad are our favourite lenders” and estimates 60 per cent of the market is first-time buyers with most of them backed by their parents.

And, Hussein Mouhaffel, of Haarts Estate Agents in Camberwell, said it was between 80 and 90 per cent of sales to first-timers, particularly with properties at less than £300k.

This is hardly news to us as the Family Building Society recognised the need to have sensible options for parents to help their offspring into their own home.

The Family Mortgage offers three key ways (which can be used individually or combined) to allow the family to help out. Firstly, a family member can place money in a security account. As well as paying interest, it counts towards the amount used for the security without actually having to ‘gift’ the money.

Secondly, the Family Mortgage allows a family member to offer some of their own property’s value as security for the new property.

And lastly, if family members are unsure of future commitments, our Offset Account allows the family members to use their savings to help reduce the amount of mortgage on which interest is charged.

But better still, it’s not just Mum and Dad that can help but any close relative. Grandparents, aunts, and uncles can all help to club together for the deposit.

By Steve McDowell

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