One in five Bank of Family borrowers utilising own property wealth

Despite making significant financial gifts, 72% of parents and grandparents don’t seek formal advice.

Related topics:  Later Life,  Mortgages
Rozi Jones | Editor, Barcadia Media Limited
5th October 2023
family generations relatives inheritance
"Many parents and grandparents do not seek any guidance or advice before parting with significant amounts of money, unless of course it’s a requirement of the product"

Nearly one in five (18%) parents and grandparents who helped their family members onto the property ladder used their own property wealth to do so, according to new research from Legal & General and the Centre for Economics and Business Research (Cebr).

Two fifths of all parents and grandparents (42%) aged 55 and over have helped younger family members purchase a home. To meet these significant costs, many have used a combination of their savings (68%), investments (22%) and even their pension (14%), but some parents and grandparents have also made use of their own property wealth to help family members.

There is more than £3.5 trillion in housing wealth held by the nation’s over 55s and an increasing number of parents and grandparents are turning to this to unlock support. Nearly one in five (18%) have used their own home to generate the money their loved ones need to make a purchase, either via equity release, downsizing or remortgaging. Among Legal & General Home Finance’s own customers, in the last year 11% took out a lifetime mortgage to make a financial gift to a family member.

Parents and grandparents who gift will provide significant sums of money, with prospective homeowners who benefit receiving £25,600 in support on average.

And it’s not just direct financial support that’s being provided. A third of parents and grandparents have allowed adult children to move back home while saving for a deposit, avoiding an estimated £24,900 in outgoings.

72% of parents and grandparents who provided support did not seek any advice before helping their family members with a house purchase, which could be why many supportive family members see a negative impact on their own finances as a result (69%).

Craig Brown, CEO of Legal & General Home Finance, said: “For families across the country, property is often one of the most significant financial assets they have. We know that many parents and grandparents feel there is no better use of that asset than to provide for the future of their loved ones, helping many younger people overcome the huge challenge of getting on the first rung of the property ladder.

“However, it’s really important people take a considered approach when providing support like this. Our research shows many parents and grandparents do not seek any guidance or advice before parting with significant amounts of money, unless of course it’s a requirement of the product, as with lifetime mortgages. This is a big decision and people should carefully consider how and what they gift to ensure they don’t risk their own financial difficulties later in life.

“While not for everyone, later-life lending products, such as lifetime mortgages, might be suitable for some people over 55 to help family members step onto the ladder, but these should only be considered following a conversation with an adviser about all the options available to provide family with support.”

More like this
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.