Equity release helping to fund the Bank of Mum and Dad
The bank of Mum and Dad now plays a huge part in the current housing market. According to a report by Shelter, 27 per cent of first time buyers who managed to get on the ladder post 2008 have only been able to do so thanks to a financial helping hand from their parents.
Since the crash, the average deposit required to buy a property was 20 per cent. While that figure has now dropped slightly to 17 per cent, a first time buyer purchasing an average priced property (£168,000) would still require a deposit in excess of £28,000.
But it is not just first time buyers who are facing financial pressures. Historically low interest rates are having a real impact on savings. As a result, parents are finding it increasingly difficult to come up with the funds to help their children onto the property ladder.
Eddie Goldsmith, Senior Partner at Goldsmith Williams Solicitors, explains how equity release could fill that savings void:
“It is estimated parents now contribute £2billion to the property market every year at an average of £17,000 per transaction. These are staggering figures particularly given their own financial predicaments from dwindling savings to poorly performing pensions.
“Equity release however offers parents – and to a certain extent grandparents – another way to help their children and grandchildren onto the property ladder without impacting greatly on their own lifestyle.
“Equity release allows a homeowner to withdraw funds from their property – either as a lump sum or in smaller, more regular payments – whilst retaining their right to live there.”
Content correct at time of publication