Mortgage News Adult Children Squeeze Parents For Mortgage And Debt Help 1194
Adult children squeeze parents for mortgage and debt help
29 February 2008 / by Joy Tibbs
Scottish Widows backs this up with research suggesting that many parents are sacrificing £67 billion of savings and potential retirement income to support children financially.
Research from Abbey Mortgages shows that parents in the UK have collectively spent more than £27 billion to enable their children to buy their first home. One in seven first-time buyers receive some form of subsidy from parents and the lender found that, on average, children receive £5,874 towards getting their first mortgage and their first property.
It also showed that parents spend an average of 17.8 hours helping their children to find the right first property and more than 22.5 hours giving them a hand with the move. One in 16 first-time buyers borrows money from parents, with the average loan totalling £19,619.
Head of Abbey Mortgages, Nici Audhlam-Gardiner, comments: “Buying a first property is an incredibly exciting experience and understandably most parents want to share in this milestone.
“Because house prices have increased so much over the past few years, buying that first home is also a bigger and more daunting investment than it was for the previous generation so guidance is undoubtedly needed.”
Those in London and the south east are given the most help at £6,485 on average, followed by children in the north of England, who receive £6,760. Children in Scotland were given the least financial help, with just £2,825 on average.
A study from Scottish Widows also shows that parents are using savings to bail out children and grandchildren. It found that 42 per cent of adult children have been given handouts to pay off debts and the average amount given to children was £12,610, totalling £67 billion collectively.
The annual Savings and Investment report reveals that 36 per cent of parents who have parted with cash had planned to use it to subsidise pension income. Worryingly, 55 per cent of parents claimed to have given or loaned their children or grandchildren thousands of pounds compared with just 39 per cent last year.
Savings expert Anne Young comments: “It seems that although people could well be tightening the purse strings at a time when the credit crunch could affect finances, adult children are still managing to extract what they can from Mum and Dad.
“Both the amount of money given and the number of children ‘sapping’ has increased in the last year, to the extent that the overall Sap Fund is well in excess of £60 billion. That’s a significant amount, and the glaring hole in parents’ finances needs to be replaced, or prepared for in the first instance, as the problem is clearly not going to go away!”
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