Equity Release Popularity Rises in Families
The Bank of Mum and Dad has been branded as socially divisive and a symptom of Britain's broken housing market as new figures reveal it is now one of the UK's biggest mortgage lenders.
By: Just Us Financial Services
The Bank of Mum and Dad has been branded as socially divisive and a symptom of Britain's broken housing market as new figures reveal it is now one of the UK's biggest mortgage lenders. Thousands of over-55s are generously gifting money as part of the Bank of Mum and Dad, using savings and even pensions to help their family onto the housing ladder, research has revealed.
However, the new data also shows that many people could be accepting a more uncertain retirement after financially supporting family members to buy a home. These latest findings follow earlier research which showed that this year, the average Bank of Mum and Dad contribution has risen by more than £6,000 to £24,100. The rise means that the Bank of Mum and Dad is now the equivalent of a top-ten UK mortgage lender, gifting a total of £6.3 billion in 2019.
Housing Wealth and Equity to Fund Home Renovations
16% of Bank of Mum and Dad lenders have or would release equity and use that money to financially support their children or grandchildren. This makes it the third most popular source of funds for the Bank of Mum and Dad. But Bank of Mum and Dad lenders are using these funds to help with their own retirement ambitions too.
More than a quarter (26%) would or have used their housing wealth to fund home renovations, and nearly three in every five (58%) parents and grandparents are using it to free up cash to stay in their own home. Across the over-55s surveyed who haven't released property equity already, well over a quarter (29%) said they would consider drawing equity from their home with a lifetime mortgage.
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