At the time, I earned around £23,000. There was no way I could pay rent and save a deposit. So I asked my parents if they could help me by loaning me a deposit, because that’s what was happening all around me. Friends’ parents with cash to spare gave it to their children as a deposit and, in a few cases, some even remortgaged or took money out of their pensions to help their children. But mine couldn’t afford to.
In 2024 alone, financial services provider Legal and General estimates that the Bank of Mum and Dad handed out a total of £9.2bn worth of help.
Sarah (not her real name) is a 34-year-old from the south of England. She managed to buy her first home with her fiancé because his grandmother lent them £25,000.
This led to Sarah and her partner ending up on a higher mortgage rate (3.5 per cent instead of closer to one per cent) and having to pay around £1,000 to change their mortgage deal early.
‘I don’t think I’d have had kids without help for a deposit’
Mia (not her real name), from Sussex told me that her grandparents’ decision to help her in the 2010s has caused some tension with her brother because he hasn’t been given the same help.
“I couldn’t afford to rent and save for a deposit,” she explains, “so my mum suggested that my grandparents lend me a deposit. The agreement was that I’d repay it in five years and keep any profit on the flat when I sold it.”
“I don’t think I’d have kids if they hadn’t done that for me,” she reflects. “We would have been too focused on having to save for a house.”
The problem now is that, unlike Sarah or Mia, homeowners today are not seeing prices rise as rapidly as they did in the 2010s. This can make giving money back to family tricky.
“We broke up and I couldn’t afford to rent anywhere on my own on my salary of £36,000,” she says. “My dad, bless him, felt so bad that I was 30 and moving into a houseshare with loads of 22-year-olds that he took money out of his pension to help me buy.”
“He didn’t want me to worry about having a boyfriend or needing a bloke to have my own place,” she says. “But I feel bad about it because that’s all the money dad has in the world, that pension – he doesn’t own a home himself. He recently moved into a social studio flat with shared washing-machine facilities – it’s council-assisted living. It’s all he could get from the council.”
“He’s in his seventies, worked all his life, lent me this money, and now he lives in this one room. I felt really bad, but I don’t think he minds because he really wanted to help me keep a roof over my head.”
This, coupled with higher prices thanks to inflation, stagnant house prices and falling savings rates, means that the Bank of Mum and Dad may not be quite as solvent as it once was.
‘I’ve paying £100 a month back – it’s all I can afford’
Jenny is determined to repay her Dad because she knows he needs the money. “I’ve been paying him £100 a month back since I borrowed that money because it’s all I can afford after mortgage and bills.”
As the Bank of Mum and Dad’s lenders reach old age, we might be about to find out what happens when their progeny can’t suddenly withdraw huge sums of money from their homes if it’s needed in an emergency.
square VICKY SPRATT
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House prices are not rising as quickly as they once were, which means people aren’t seeing their equity increase rapidly. Higher mortgage rates also mean that owning a home is more expensive than it was pre-pandemic if you have a loan.
Labour ministers continue to talk about building 1.5 million new homes, and the Prime Minister mentions his ambition to increase homeownership at every opportunity. However, they should pay attention to the potential consequences of so many young adults borrowing money from their parents – it increasingly looks like a stopgap, and not everyone has a repayment plan.
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