The Bank of Mum and Dad is basically a term for those parents who are in a position to be able to afford to lend their children money. For some first time buyers, this has become the easiest and fastest way to raise a deposit for their home and, since 2016, the Bank of Mum and Dad has become one of the UK’s top ten lenders!
Parents are using savings, investments, equity release products and other means to provide their children with the money they need to get on the property ladder – and it comes as no surprise as the average deposit has increased by 71% from £19,364 in 2008 to £33,127 in 2018, according to research by Halifax.
But are the Bank of Mum and Dad still lending?
First-time buyers are managing to find ways to take their first step onto the property ladder at the highest rate in 10 years. This increase in first-time buyers, in part, can be attributed to the bank of mum and dad, who are continuing to lend in order to help their children in what appears to be difficult times, following a surge in house prices over the last 30 years.
Prospective first-time buyers who plan to use the bank of mum and dad to provide funds has remained at 23 per cent since 2017, according to research by Aldermore.
Data collected by the firm shows that 54% of those parents willing and able to provide a helping hand for their children will draw on their cash savings.
Meanwhile, 24% plan to use money generated using an equity release product, 19% through downsizing and 17% from remortgaging. A further 6% will use cash taken from their parents’ pension with the final 4% through the sale of their parents’ second home.
With increasing house prices and larger deposits needed to purchase property, many potential first-time buyers are reliant on the support of the bank of mum and mad in order to own their own home. As a result, the mortgage market over recent years has responded to this with the introduction of more innovation from lenders looking to support this space.
Today many big names now offer a range of different options to support families, including the ability to use a parent’s savings as a potential deposit or being able to use the parental income to boost first-time buyer affordability.
If you’d like to help your children onto the property ladder and want to discuss the options for their future, get in touch with an Oviso advisor today.
To find out more about mortgages, personal insurance, business insurance and protection or to discuss the options available for your circumstances, contact our team of advisors