The Bank of Mum and Dad has the potential to help nearly 450,000 individuals onto the property ladder this year through equity release.
According to new research from Legal & General and economics consultancy Cebr, using equity release to free up capital from the family home could help as many as 442,900 individuals to buy a house this year.
Steve Ellis, managing director of Legal & General home finance, said: “Releasing equity from a family home has the potential to play a role in tackling our housing market’s affordability crisis. By releasing equity using a lifetime mortgage, parents and grandparents have the opportunity to help their loved ones onto the property ladder.
“This growing market has the potential to support nearly 450,000 people onto the property ladder this year alone.”
Equity release gives you access to the wealth tied up in your property without having to sell or move home. It is designed for older homeowners who own their property outright or have relatively small mortgages to pay.
You can borrow against the value of your home, sell it or part-exchange it for a lump sum or a regular monthly income.
A lifetime mortgage is a long-term loan which you can use to extract your funds in a single lump sum or in smaller amounts over time through what is known as drawdown. Home reversion plans allow you to access all or part of the value of your property while retaining the right to remain in it rent free.
Soaring house prices combine with stagnant wage growth are making it increasingly difficult for first-time buyers to get a foot on the property ladder.
According to the Office for National Statistics, in 2016 the average house price in England and Wales reached 7.6 times average annual earnings.
The same research into buyer affordability revealed that over the last 20 years, house prices have increased by 259%, with wages only rising by 68% over the same period.
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