According to Legal & General insurance firm, the ‘bank of mum and dad’ is number 10 on the list of UK’s largest lenders.
The insurance company states that £5.3bn has been lent to offspring in 2016, helping them to get onto the property ladder. A recent study by conveyancing firm, My Home Move revealed that one home in 12 in the UK has been partially funded by a gift deposit from a family member or friend.
During the last year, 1.125m houses have been purchased, and 90,900 of those had received funding for the deposit from someone else. Although the number of general purchases has increased by 3.6%, the number of people receiving help from friends and family for a deposit has increased by 29.6%.
Friends and family are also being relied on to help 17% of first time buyers to get onto the property ladder. The chief executive of My Home Move, Doug Crawford, said:
“With property prices racing ahead of earnings, we’re expecting to see the gifted deposit rate surpass the 10pc mark soon.”
He added that gifted deposits weren’t sustainable and people without financial help from friends and family also needed to be able to get onto the ladder. According to the study, assistance from friends and family has been utilised more than the Help to Buy ISA scheme launched by the government.
First time buyers may want to seek advice from a mortgage adviser. They spend time on a CeMAP course, so that they are fully qualified to help potential buyers achieve their dream of buying a home.
