According to Legal and General, the amount lent to family members entering the property market in 2018 rose to £5.7bn The average contribution from a family member was £24,000 making family the 11th largest mortgage lender!
How can this be explained? Well, as average house prices have continued to rise and wages under pressure coupled with longer life expectancy and inheritances not being released as quickly means more parents are choosing to try and help their children during their lives. The problem is however, many of the Mum’s and Dad’s don’t actually have the money to be giving in the first place so could be jeopardising their own financial security. Many are finding the money by downsizing, using equity release, cashing in their pensions or even taking on debt themselves!
Following a survey, here are what the Mums and Dads have said:
26% say they are worried they won’t have enough to live on in their own retirement!
15% say they have accepted a lower standard of living as a result!
11% say they feel less secure!
6% have had to delay retirement to make the gift!
It is difficult but putting your own financial security at risk in order to help your children, whilst understandable, you really should watch for the unintended negative consequences. In a lot of cases we may actually help the children buy their house without your help! Before taking the plunge and becoming a lender yourself, contact your local experts and ensure your own Financial Fortress!