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The Family Bank

Planning to aid the next generation

According to new research, close to one in five (18%) of parents and grandparents have dipped into their own property wealth to assist their family members in climbing onto the property ladder [1]. Often, they turn to the equity of their homes to gather the needed funds, either through equity release, downsizing or remortgaging.

This group, affectionately known as the ‘Bank of Family’, is increasingly leveraging their property wealth to aid their children’s entry into the housing market.

Using property wealth to facilitate homeownership

A significant 42% of parents and grandparents over 55 have financially supported younger family members for home purchases. They’ve utilised a mix of their savings (68%), investments (22%) and even their pension (14%). However, some have also turned to their property wealth to lend a helping hand.

The nations over-55s hold more than £3.5 trillion in housing wealth[2]. An increasing number of this demographic are unlocking this wealth to offer support. Almost one in five (18%) have used their home to raise the necessary funds for their loved ones’ property purchases, whether through equity release, downsizing or re-mortgaging.

The depth of generational support

Parents and grandparents who gift often provide substantial sums, with the average support amounting to £25,600. Beyond direct financial assistance, a third of parents and grandparents have allowed adult children to move back home while saving for a deposit, saving an estimated £24,900 in outgoings.

Equity release and other financial products that unlock property value require specialist advice. Surprisingly, 72% of parents and grandparents who offered support only sought professional advice after aiding their family members with a house purchase. Consequently, for many, this negatively impacted their financial situation (69%).

Potential financial difficulties later in life

While property is often a significant financial asset for many families, it’s crucial to approach such support carefully. Research indicates that many parents and grandparents do not seek guidance or advice before parting with large sums of money. This is a significant decision and should be cautiously approached to avoid potential financial difficulties later in life.

Later-life lending products, like lifetime mortgages, may be suitable for some over-55s to help family members get on the property ladder. However, these options should only be considered following a conversation with a professional adviser about all available support options.

Need advice to help make the best decisions for your financial future?

If you require further information or need advice on making the best decisions for your financial future and that of your loved ones, take the first step today towards making an informed decision. Contact us for expert advice tailored to your unique circumstances.

Source data:

[1] Unless otherwise specified, all figures drawn from Legal & General’s 2023 Bank of Family Research 2 October 2023.

[2] Office for National Statistics, Household net property wealth by household representative person (HRP) age band: Great Britain, April 2016 to March 2020.

THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

Adam Reeves

Author: Adam Reeves

DipPFS Cert CII (MP&ER)
Independent Financial Planner, Wealth Manager, Director

Last updated on

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