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Gifted Deposits More Popular Than Ever

A Look at Research on Gifted Deposits from Legal & General

Parents are now gifting more deposit than ever before, according to research from Legal & General. Statistics show that if the “Bank of Mum & Dad” was an actual bank, they would be within the UK’s top 10 biggest lenders. The average for gifted deposits by parents is now hitting around the margin of £24,000. These deposit gifts can also come from other family members such as grandparents as their wealth can at times skip a generation.

Every year we see thousands of homebuyers becoming reliant on the aid of a family member to get them on the property ladder (or upgrade to a larger home). The fact remains that if these gifts were suddenly outlawed by officials, the mortgage market would be in dire straits. Luckily, it would seem they are not going anywhere, anytime soon.

According to the survey undertaken by L&G, almost 20% of parents who had helped their children with buying a home, did so because they felt a sense of personal parental responsibility to help out. Over the years, property prices have risen beyond the reaches of the average wage, putting many at a disadvantage when it comes to buying their first home. This becomes especially apparent if there is only one income supporting the household.

Whilst renting provides a means to an end for the time being, it unfortunately eats away at any chance people have to save for a mortgage deposit. Some even go as far as moving back in with their parents to help save a little bit extra.

Another statistic shown from the survey indicates that the generosity of parents could in facts hurt their living standards in retirement. Their research involved surveying 1600 parents who had helped their children out, most of them stating they had used their own savings to do so. Even more worrying is that some were recorded as withdrawing from their own pension schemes or equity in order to gift a deposit. In essence, this is them putting forward any inheritance their child would receive.

For more First-Time Buyer Mortgage Advice in Manchester, please Get in Touch.

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