With soaring property prices and deposits the Bank of Mum and Dad has been invaluable for many first-time buyers looking to get on the property ladder.
However, not everyone is lucky enough to have a family member with available funds to help them buy a home.
Help could now be at hand though – from someone else’s parents.
According to the latest research from Legal & General, more than a quarter of UK parents would actually consider lending to other people’s children in exchange for a return on their investment.
The research, conducted in partnership with economics consultancy Cebr, shows that 27% of parents would consider funding initiatives to support other people’s children who want to buy a property.
Legal & General’s Bank of Mum and Dad research previously revealed that the financial support from parents and family for homebuyers make them the equivalent of a top 10 mortgage lender in the UK.
The Bank of Mum and Dad will lend over £5 billion across the UK this year and be involved in 25% of all property transactions that take place in the market in 2016.
In terms of investment returns, 39% of potential investors expected to receive a financial reward in the form of a loan repayment with interest, while a further 21% would expect monthly rent from the occupier.
Stephen Smith, director Legal & General housing partnerships, said the findings highlighted how interest rates and new restrictions on the buy-to-let market have left older generations searching for a good return on their investment.
He said: “Initiatives for funding other people’s children offer a new way to invest into the property market, as they help to pair up older generations looking for a better investment return with prospective homeowners who need financial help.
“Clearly the demand for investment opportunities is there – now we need to see if the industry responds with product innovation to enable the Bank of Mum and Dad to spread beyond funding the immediate family unit.”
What Mortgage has teamed up with London & Country to offer you expert advice on the right mortgage deal.
Whether you’re buying a new home, remortgaging to a new deal or buying an investment property, L&C can help – and you’ll pay no fee for their advice. To find out more, click here.
