The bank of Mum and Dad, BOMAD, has become one of the biggest lenders to first time buyers, according to a new report by Legal and General. They are expected to loan in the region of £6.5bn to help their children buy their first home this year, and many cases parents are selling their homes to release equity in order to help their children get onto the property ladder.
This year the bank of Mum and Dad is expected to help fund purchases on average worth £75bn, which includes 298,000 deposits for mortgages.
Funding is anticipated to have risen on average from £17,000 in 2016 to £21,000 this year. The generation most affected by stagnant wage increases and huge house price increases are the Millennials who will be the largest recipients according to their research, receiving 79% of the funding to adult children.
Richard Durrent, Managing Director of Intercounty commented: “Parents realise that their children don’t have the same advantages that they had in the past such as access to reasonably priced homes, a secure job and the promise of a good pension. So instead they are having to dip into their own pockets, or by releasing equity in their current homes in order to help their children to get onto the housing ladder.’ 2
‘A lack of new houses, especially in the South East is continuing to push up house prices. So parents are finding that more and more they need to help their adult children get on the property ladder,’ he added.
Parents are not just lending to first time buyers, they are also helping their children find deposits for second homes too. Most second steppers will use equity from their current property, 63% with 41% saying they would need to use savings. For those people having to turn to family and friends, 26% are looking to borrow more than £20,000.3
If you are looking at raising capital from your home would like some advice then why not pop into your local branch of Intercounty and we will introduce you to an adviser from Embrace Mortgage Services. Their initial mortgage consultation is free. They will charge a fee of between £399 and £699 upon mortgage application. Depending on the amount of research and administration required.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Intercounty is a trading name of ICIEA Ltd, which is an introducer appointed representative of First Complete Ltd for the purpose of the provision of advice in relation to mortgage and non investment insurance products. Mortgage and Protection advice is provided by LSLi Ltd t/a Embrace Mortgage Services, an appointed representative of First Complete Ltd. First Complete Ltd is authorised and regulated by the Financial Conduct Authority.