You are here: Home - Mortgages - First Time Buyer - News -

Bank of Mum and Dad will lend, but with strings attached

Written by: Christina Hoghton
Parents are getting tough on terms and conditions when it comes to helping their kids get on the property ladder.

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

Related Posts

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape, and moving your cash savings to a higher paying deal is a good plac...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week