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Bank of Mum and Dad becomes top ten lender

Empty-nesters will be putting their hands in their pockets to the tune of £6.5bn a year to help their adult fledglings flee the nest.

This stunning statistic means that the Bank of Mum and Dad has now overtaken all but eight of the country’s major mortgage lenders, according to a report from major insurer L&G.

The report, made in conjunction with economic consultancy Cebr states that the Bank of Mum and Dad will help fund property purchases worth £75bn in 2017 with an average contribution of £21,600.

The £6.5bn figure, it says, has risen from £5bn last year.

Why?

The finger of blame has been pointed in many places. So-called inter-generation inequality, unattainable deposit levels and a broken housing market are chief among them, of course.

The old chestnuts of lack of housing supply and regulatory constraints in the lending market are both still being quoted.

None of this comes as any surprise to us at the Family Building Society.

We have been talking to families for years now, we know the extent of the issue and how difficult it is for first time buyers to attain their dream of home ownership.

The above are factors, naturally, but our research tells us that parents and grandparents want to help but many of the solutions out there are complicated, expensive, and unflexible. Giving money away is not something that many want to do, as they simply don’t know what their own needs will be in the future.

That’s why we devised the Family Mortgage - to make home ownership for first time buyers easier and less expensive than would otherwise be the case.

How does it work? 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.

Just one way that innovative lenders like the Family Building Society can help give your younger folk a leg up the ladder.

For more information on the Family Mortgage, talk to one of our friendly and highly trained staff on 03330 140140.

https://www.theguardian.com/business/2017/may/02/bank-of-mum-and-dad-lend-65bn-property-market
http://www.bbc.co.uk/news/business-36181318

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Family Building Society
Ebbisham House
30 Church Street
Epsom
Surrey KT17 4NL
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