Loans from the bank of mum and dad ... that come with pre-nup

MORE and more young couples forced to rely on the ‘bank of mum and dad’ when buying a house now find that the loan comes with strings attached.

Parents keen to protect their often considerable investment are demanding that children sign a ‘pre-nup’ with their partner to ensure the parental contribution remains within the family if the relationship breaks up.

It is the latest in a series of uses for the pre-nup that were unforeseen by the Supreme Court judges who five years ago granted couples the right to arrange their divorce settlement even before their wedding day.

The ‘bank of mum and dad prenup’ joins the ‘infidelity penalty’ – designed to ensure that an unfaithful spouse pays the price in a divorce – and the ‘housework rota’ – which sets out exactly which partner will do which chores.

James Skinner of the Simpson Millar law firm said the acceptance of pre- nups by the courts had prompted a huge rise in interest.

‘What we did not expect to see were parents inquiring about agreements that will specifically secure any future inheritance or financial donation solely for their offspring,’ he said.

‘They want to ensure any inheritance is left in the hands of their children – not their partners. This is particularly in the case where mum and dad have financially supported their children to get on to the property ladder.

‘As parental support becomes invaluable for many first-time buyers, so does demand for parent-sponsored pre-nups.’