THE BANK OF GRAN & GRANDAD
In a new trend, family assistance is now coming from the older generation for grandchildren buying their first home
Millennial homeowners are bypassing the Bank of Mum & Dad and leapfrogging a generation by going to their grandparents for financial help.
One in three are given help with the deposit for their first home, according to online mor tgage broker Trussle, with an average of £7,400 being handed over.
Digging deep to help family buy their first home is a trend of more recent times. Only 3% of today’s over-55s were given any financial help from family when buying their first home, according to Trussle, whereas 25% of today’s prospective homeowners now get help from grandparents.
Far from scrimping to make ends meet, today’s grandparents could be considered pretty flush. They’re wor th an average of £350,000 according to numbercrunching from Charter Savings Bank. This is based on their average house value of £255,000, pensions and investments of £66,000, and nearly £30,000 in cash savings.
But it’s not just the depth of the older generation’s pockets that has changed. Back in 1999, the average house price was £80,000; just 4.5 times the average annual salar y. By comparison, average house prices today stand at £235,000 – nearly 8 times the average annual salar y.
Yet most mor tgage lenders will lend borrowers only up to five times their income.
You may want to help your grandchildren if you’re financially able to do so, but do be ver y clear about whether the money is a gift or a temporar y loan. One in five prospective homeowners say that they don’t expect to repay money from family.
Of course not ever yone is either in a financially comfor table position to help their grandkids get on the proper ty ladder, or even feel that it’s the right thing to do. However if you want to help out, there are ways to do so without sacrificing your savings.
If you’re living in a big family home and don’t want to downsize, you could consider letting your grandkids stay with you, so giving them time to save up for a deposit.
Relatives can help out