One in five (18%) parents and grandparents use their housing wealth to help family members become prospective homebuyers, research by Legal & General has found.
These prospective buyers – also named the ‘Bank of Family’ – hold £3.5trn in national housing wealth.
Despite this, almost three in four (72%) of guardians who gave financial support were not advised before helping their family purchase a house.
An additional 69% saw a negative impact on their own finances.
Prospective buyers turn to either equity release, downsizing or remortaging to help young homebuyers get on the ladder.
Rudy Khaitan, managing partner of Senior Capital, explains that equity release is important to stimulate the housing market amid the cost-of-living-crisis.
Equity release is a form of financing that allows homeowners to access capital tied up in their home and turn it into cash without having to move out of their property.
Also, Khaitan predicts that because property is a valuable financial asset for families, the market will see greater activity from first-time buyers (FTBs).
This comes despite a 22% fall in FTBs between January and August this year, according to Halifax.
Khaitan said: “In today’s society, many over 55s find themselves in a paradoxical situation – they are ‘asset-rich’ due to the value of their homes, yet ‘cash-poor’ with limited disposable income. As the cost of living continues to rise, many find themselves struggling to make ends meet, despite owning valuable properties.
“Equity release offers a solution to this dilemma by enabling homeowners to tap into the wealth tied up in their homes. It can provide a much-needed cash injection to enhance their quality of life, cover unexpected expenses, or even help their families.”
