Could equity release help ‘bank of mum and dad’?
The “bank of mum and dad” now helps fund more than a quarter of property purchases.
According to new research by Legal & General, friends and family are expected to lend more than £6.5billion in 2017 to young homebuyers, up from £5billion last year.
The money is helping to provide deposits for more than 298,000 mortgages to help buy homes worth £75billion and means the bank of mum and dad is on a par with the UK’s ninth biggest moneylender.
Legal & General chief executive Nigel Wilson said: “The bank of mum and dad continues to grow in importance in helping young people take early steps on to the housing ladder.”
The news will come as no surprise to those who have dipped into their hard-earned savings to help out their children or grandchildren buy their first home.
Many retired people feel sorry for youngsters in their family who are faced with finding cripplingly high deposits for sky-high property prices. But instead of emptying your nest egg and leaving yourself cash-poor, there’s a painless way to help the kids buy their first home – equity release.
With property prices rising by four per cent in Scotland and record low interest rates now available for equity release plans, there has never been a better time for homeowners to make the most of their property wealth.
And, according to new analysis from leading over-55s finance specialists Key Retirement, equity release plans have boosted Scottish property owners’ retirement finances by more than £86 million in the last year.
Equity release is available to those aged between 55 and 95 who own a property worth at least £70,000.
It allows a tax-free cash lump sum to be taken from the value of their property.
With equity release providing homeowners with the option to unlock the wealth built up in their property, 21 per cent decide to use the money to provide financial help to their family.
So, if you want to help someone in your family get a foot on to the property ladder, there’s no need to sacrifice your retirement dreams of exotic travel or making home improvements in order to provide financial support.