The value of lending from the Bank of Mum and Dad continues to soar – but many parents and grandparents are harming their own finances.
Analysis by Legal & General found that the Bank of Mum and Dad is digging ever deeper with the average contribution up by £6,000 to £24,100 this year, and £31,000 in London.
The value of Bank of Mum and Dad lending will add up to £6.3bn this year – up more than 10% from the £5.7bn of lending last year, L&G said.
However, the insurer warned that many parents and grandparents could be putting their own financial prosperity at risk.
Although more than half are using cash (53%) and 16% are using equity release to help fund a deposit, 9% are cashing in lump sums from their pension savings, 7% are using their pension drawdown and 6% are drawing on their annuity income.
A quarter of Bank of Mum and Dad lenders said they are not confident they have enough money to last out their retirement after helping their children, and 15% have had to accept a lower standard of living. A small number (6%) are even choosing to postpone their retirement.
Chris Knight, chief executive of Legal & General Retail Retirement, said: “Parents and grandparents across the UK want to see their loved ones settled in homes of their own and are giving generously as part of the Bank of Mum and Dad. Many are using their pensions and savings to help out and unfortunately this could be leaving some facing a poorer retirement, especially if they don’t get the right advice.
“There is around £1 trillion of property equity owned by the over-55s.”