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Bank Of Mum And Dad Named As 10th Largest Mortgage Lender In UK
27 August 2019, 13:07 | Updated: 27 August 2019, 14:00
Pensioners could be lowering their quality of living to get their children onto the property ladder, according to a new survey.
On average, the so-called Bank of Mum and Dad will lend around £24,100 so their children can put down a deposit in 2019, a figure which rises to £31,000 in London.
The amount is £6,000 higher from 2018, according to financial services firm Legal & General.
Collectively, parents and grandparents have lent more than £6.3 billion, meaning if they were a bank they would be the 10th biggest mortgage lender in the country.
But although parents would do anything for their children, their generosity could end up lowering their standard of living on retirement after offering financial assistance.
A survey of more than 1,600 people revealed that over half have used their savings to give their offspring a helping hand, but others were taking money out of their pension to fund the loan.
Some admitted they would consider using equity release from their homes.
This was despite a quarter of them admitting they had fears they would not have enough money to last them through their retirement.
Chris Knight, CEO of Legal & General Retail Retirement, said although the generosity of family members is "inspiring", they need to be making "informed choices" in the run up to retirement.
He added: “Thousands are still dependant on the Bank of Mum and Dad to take their first or next step on Britain’s housing ladder.
"The generosity of parents and grandparents is inspiring, but many are making big financial decisions without adequate planning or professional advice. Retirement is much longer, and much more varied, than it used to be. Gone are the days of ‘once and done’ retirement decisions.
"Informed choices in the run-up to, and at the start of, the retirement journey can make a huge difference when it comes to being able to fund the retirement people really want."
Top 10 mortgage lenders in the UK
1. Lloyds Banking Group £42.5bn
2. Nationwide £35.7bn
3. Royal Bank of Scotland £30.5bn
4. Santander UK £28.3bn
5. Barclays £23.1bn
6. HSBC Bank £21.5bn7. Coventry Building Society £9.2bn
8. Yorkshire Building Society £8.7bn
9. Virgin Money £6.8bn
10. Clydesdale Bank £5bn