30 Apr

Parents set to lend £5 billion to buy property

Parents set to lend £5 billion to buy property

The so-called Bank of Mum and Dad is playing a key role in the UK housing market, according to new research.

A study by financial firm Legal & General has concluded that parents will lend their children around £5 billion in 2016 to help cover the deposits on more than 300,000 home purchases.

This means parents have become a top ten mortgage lender and are involved in around 25 per cent of all property transactions.

"The Bank of Mum and Dad plays an increasingly vital role in helping young people take their early steps on the housing ladder," explained Nigel Wilson, chief executive officer of Legal & General.

He added: "People will always want to help family members as it is a natural thing to do. Relying so heavily on the Bank of Mum and Dad however risks increasing inequality as many young people today are not lucky enough to be able to access parental support when buying a home, or can’t afford to buy even with parental help."

According to the research, the average parent’s financial contribution is £17,500 – equal to seven per cent of the overall purchase price.

More than half of the money helps is regarded as a gift, while 18 per cent are loans with no interest and five per cent are loans with interest.ADNFCR-1222-ID-801817870-ADNFCR

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