The so-called Bank of Mum and Dad (Bomad) is funding more homebuyers than ever before, according to a survey from Legal & General. In 2016, a colossal £5 billion of cash help was handed out to buyers from parents, other members of the family and friends.
That figure is expected to top £6bn in 2017. Parents or family members will provide the funding to power property deals of around £75bn this year alone with around one quarter of all homeowners requiring some financial backing on top of a mortgage to buy their own home. Most of those receiving either a loan or gift around are under the age of 30 (89 percent) – the millennial generation – according to the report.
The research, carried by Legal & General with the Centre for Economics and Business Research (Cebr), revealed that the money either loaned or gifted by the Bank of Mum and Dad would put that "institution" among the top 10 lenders in the UK, making this avenue of funding one of the most important right now for young buyers.
Lack of affordable housing a problem
However, Nigel Wilson, Legal & General's chief executive, warned that this sort of lending is unsustainable while he described the UK's housing market as "broken".
He said: "Younger people today don't have the same opportunities that the baby boomers had, including affordable housing, defined benefit pensions and free university education.
"Parents want to help their kids get on in life, and the bank of mum and dad is a testament to their generosity, but it is also a symptom of our broken housing market.
"The UK is experiencing a supply-side crisis in housing – we are simply not building enough houses. We need to build more homes for the young, old and families alike, more quickly and cost effectively."
Finding the cash to make a purchase is the No. 1 issue for many potential buyers in the housing market. However, once you've secured your finance and identified the property you want to buy, you need solid professional help and advice to seal the deal.
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