A new study into the Bank of Mum and Dad (BoMaD) has revealed that parents who help their children onto the property are not high earners, contrary to popular belief.
According to research conducted by the London School of Economics on behalf of the Family Building Society, parents are not from high income families.
Many are already drawing a pension but have assets because they are homeowners and often have savings and investments put aside for a rainy day. The research also revealed that they are also more likely to live in the south of England.
Rather than making outright gifts to their children, the study found that most transactions took the form of interest free loans to enable their offspring to put down a deposit, although some also helped with legal costs, stamp duty or initial mortgage payments.
The majority of help – 68 per cent of BoMaD transactions – helped first time buyers onto the property ladders, although a surprising number of parents – 27 per cent – helped their children with second or even third purchases.
The report also stated that the term ‘Bank of Mum and Dad’ is misleading, as, unlike a bank, many parents failed to either provide a written record of transactions or even discussed the terms of the repayment with their children. Some admitted that they had not had a conversation with their children to make it clear whether the money was a loan or an outright gift and others said they had not considered what would happen if one or both parents died.
Sarah Dowie, a Solicitor with Palmer said: “Many families are either confused about how to best help their children to get on the property ladder or are worried that they might be risking their rainy day fund so that they have nothing to fall back on if the worst should happen.
“To help navigate the complexities that the ‘Bank of Mum and Dad’ creates, we are hosting a free seminar to help families understand what is involved and identify the best options for their particular circumstances.”
The FREE seminar will take place on Tuesday 19 March 2019 at Rayleigh Town Museum, First Floor, 91 High Street, Rayleigh SS6 7EJ from 7.30am to 10.00am.
The seminar will cover a range of topics:
To help you navigate the complexities this creates, we will be hosting a FREE seminar on the ‘Bank of Mum and Dad’ which will cover a range of topics:
- Dennis Copping (AJ Life) – Financial Adviser, will discuss deposits, lenders, shared ownership protection
- Sarah Dowie – Solicitor, will provide an overview on cohabitation, cohabitation agreements and
pre-nuptial agreements - Helen Jago – Associate Solicitor, will provide an overview of Wills and Declarations of Trusts
With more and more people affected by the ‘Bank of Mum and Dad’, places at this event are set to be in high demand so please reserve your place now to avoid disappointment.