A latest research conducted by Legal & General and Cebr has revealed that increasingly parents and grandparents in the UK are sacrificing their pension savings and comfort to help family members climb on to the property ladder.
Over 50,000 “Bank of Mum and Dad” (parents financial helping their children for home deposit) transactions are set to be supported by pension savings in 2018. In fact, 14 per cent of the transactions will be supported by the parents aged above 55 years, releasing their own property wealth.
“Almost one in five parents and grandparents aged over 55 are accepting a lower standard of living to help their loved ones onto the housing ladder. The number of ‘lenders’ accepting a lower standard of living was higher amongst those approaching retirement, including over a quarter (27 per cent) of those aged between 55 and 64,” the report said.
Despite this, thousands will still help their loved ones using pension savings or income in 2018. Over 50,000 transactions will be partly or wholly funded by those cashing in their pension pots to provide a lump sum for a deposit and nearly 23,000 are likely to be supported by individuals using their annuity income.
The findings follow earlier research released by Legal & General on the size of “Bank of Mum and Dad”, which is set to be the equivalent of a £5.7bn mortgage lender this year, responsible for more than one in four UK housing transactions in 2018.
Chris Knight, CEO, Legal & General Retail Retirement, says, "parents and grandparents across the UK are often digging deep into their pension pots to support loved ones, balancing the housing needs of their children and grandchildren with their own retirement goals."