Nearly half of over-55s who plan to help out adult children want to ensure the money is not squandered and that grandchildren benefit from any handouts.

And they are tightening up their lending terms as a result, according to Key.

The equity release adviser found that over a fifth (22%) plan to set specific rules on how any money is spent while 36% said they will discuss what the cash is used for before paying it out. For 14%, they want to ensure their children seek financial advice on how to spend or invest the money.

Only one in five homeowners aged 55-plus said they don’t mind how their kids spend the money.

Making sacrifices

Older homeowners are generous with their money, with around 46% saying they have already helped children with handouts worth more than £5,000 while another third (30%) plan to make payouts of more than £5,000. Around 11% will give more than £20,000.

But helping children can mean parents having to cut back, with one in six (16%) saying it has already hit their own finances, and 78% are worried it could leave them in financial trouble later in life.

Will Hale, CEO at Key, said: “The Bank of Mum and Dad is firmly established as a part of the mainstream UK lending market and more and more parents are banking on helping children if they can afford to.

“However, as with any other lender, they have to set limits on how much they can afford to lend and on what the money is used for. Stipulating that children should receive financial advice is a sensible move as good advice is key to making sensible financial decisions. That applies to parents too, as they should not lend money without considering the short, medium and long-term financial implications for themselves.”

Related: See YourMoney.com’s Five ways to get on the property ladder without the Bank of Mum and Dad for more information.