Parents and grandparents – also known as the ‘Bank of Family’ – are turning to their own property wealth to get their children onto the housing ladder.
That’s according to new findings from Legal & General and the Centre for Economics and Business Research (Cebr).
The research shows that two fifths of all parents and grandparents (42%) aged 55 and over have stumped up the cash to help younger family members purchase a home.
To meet these costs, many have used a combination of their savings (68%), investments (22%) and even their pension (14%).
However, some parents and grandparents have also made use of their own property wealth.
Nearly one in five (18%) have used their own home to generate the money their loved ones need to make a purchase via equity release, downsizing or re-mortgaging.
Despite this, the research shows 72% of parents and grandparents who provided support did not seek any financial advice before helping their family members.
Legal & General Home Finance chief executive Craig Brown 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.
“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.”
He says that while not for everyone, later-life lending products, such as lifetime mortgages, might be suitable for some people over 55 to help family members.
However, he stressed these options should only be considered following a conversation with an adviser.
