• Sat. Mar 2nd, 2024

North East Connected

Hopping Across The North East From Hub To Hub

Families in the North East mobilise the ‘Bank of Family’ to propel homeownership dreams

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A recent study by Legal & General and the Centre for Economics and Business Research (Cebr) sheds light on the growing trend of parents and grandparents utilising their property wealth to aid their relatives in navigating the challenging property ladder.

Parents and grandparents are frequently turning to the value of their own homes to come up with the cash, either through equity release, downsizing or remortgaging.

With the average house price in the North East £159,900, the average Bank of Family contribution in this area sits at £20,200.

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%), but some parents and grandparents have also made use of their own property wealth to help family members.

The generosity extends beyond mere financial aid, as the study indicates that one-third of parents and grandparents have allowed adult children to move back home while saving for a deposit, resulting in an estimated savings of £24,900 in household expenses.

Craig Brown, CEO, Legal & General Home Finance notes “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.

“While not for everyone, later-life lending products, such as lifetime mortgages, might be suitable for some people over 55 to help family members step onto the ladder, but these should only be considered following a conversation with an adviser about all the options available to provide family with support.”

By Writer