Nearly one in five (18%) parents and grandparents who helped their family members buy a home used their own property wealth, research from a finance provider found.
A survey from Legal and General in collaboration with the Centre for Economics and Business Research found that in total, 42% of parents and grandparents aged 55 and over contributed to the purchase of a family member’s home.
Some 68% used their savings, 22% used investments and 14% sourced the money from their pension.
Legal and General Home Finance’s internal data suggested that in the last year, 11% of its customers took out a lifetime mortgage to make a financial gift to a family member.
Its data also showed that a third of parents and grandparents allowed adult children to move back home to raise a deposit and save on an estimated £24,900 in expenses.
However, not all parents and grandparents who help relatives get onto the property ladder seek advice.
Nearly three quarters not getting financial advice
According to the research, 72% did not get professional advice before helping a relative with a property purchase. It was indicated that this came with negative consequences as 69% saw their finances impacted as a result.
Legal and General said while this did not always change their standard of living, they did not consider all of the outcomes.
Craig Brown, CEO of Legal and General Home Finance, said: “For families across the country, property is often one of the most significant financial assets they have. We know that many parents and grandparents feel there is no better use of that asset than to provide for the future of their loved ones, helping many younger people overcome the huge challenge of getting on the first rung of the property ladder.
“However, it’s really important people take a considered approach when providing support like this. Our research shows many parents and grandparents do not seek any guidance or advice before parting with significant amounts of money, unless of course it’s a requirement of the product, as with lifetime mortgages. This is a big decision and people should carefully consider how and what they gift to ensure they don’t risk their own financial difficulties later in life.
“While not for everyone, later-life lending products, such as lifetime mortgages, might be suitable for some people over 55 to help family members step onto the ladder, but these should only be considered following a conversation with an adviser about all the options available to provide family with support.”