Still, struggling to save for a home? Why not follow the hordes of other first time home buyers and get a little help from the bank of mum and dad?
According to Legal & General, last year, parents had collectively handed over £6.3 billion to help their kids onto the property ladder. To put this into perspective, the UK’s 10th largest mortgage lender lent £5 billion in 2019.
That means if the bank of mum and dad was a mortgage lender they would have easily cracked the top 10 biggest mortgage lenders in the UK. And we predict that mum and dad will be continuing to creep up that list this year.
New research by MoneySuperMarket has revealed that in the last 12 months the amount loaned by families members has doubled. The average amount that children are borrowing from their parents has gone from £2,479 to £5,914! That works out at £281 billion nationally.
However, not all of that borrowed money is going towards a home deposit. A fifth of those surveyed named buying a car as the main reason for the loan. However, a further fifth did put the money towards a house.
The bank of mum was found to be the most generous, with 30 per cent of the loans coming from mothers. The bank of dad was found to provide only 21 per cent of the loans. However, 23 per cent of them were given by both parents together.
There are definite perks for opting to borrow from a family member if they can afford it. 44 per cent of those who chose to borrow from their family said it was so they didn’t have to pay interest. While 40 per cent said it was so they could avoid running up debt with a bank.
‘The average amount of money borrowed from family members has more than doubled in the past year. Largely to use towards big purchases like cars and property to avoid paying interest,’ says Sally Francis-Miles from MoneySuperMarket.
‘It borrowing from family is an option for you, and you have agreed how and why you would pay it back so both parties are happy, it can be a good way of financing big purchases.’
Would you turn to your parents to help you get a foot onto the property ladder?