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More over 55s using pensions and savings to help family onto property ladder

14 October 2019

Advisers are seeing growing numbers of over-55s looking to help children and grandchildren on to the property ladder, according to proprietary research from Key.

The equity release adviser says the research shows retired homeowners are increasingly considering cashing in buy-to-lets, acting as guarantors as well as taking out new mortgages to help younger generations buy their first property.

While parents and grandparents continue to use both savings (95%) and pension funds (21%) to help out their family, nearly a fifth (19%) of advisers surveyed have had enquiries from older customers about selling buy-to-lets and holiday homes, while nearly a third (32%) have been asked about acting as guarantors to helps their children or grandchildren.

Over a quarter (28%) are investing the option of remortgaging, while a fifth (21%) are taking out new mortgages as they look to share their property wealth.

Meanwhile, mortgage brokers estimated that nearly half (47%) of first-time buyers are partially helped with a deposit by grandparents or parents, with only a third managing to go it alone without any financial support. As a result, 60% of brokers expect a rise in first-time buyer enquiries this year.

UK Finance data has shown that the average first-time buyer in London is 32 with a household income of £68,000, while in Scotland the average age is 29 with a household income of £35,000.

The research also found that asking for financial assistance isn’t limited to first homes. Advisers estimate that nearly a quarter (24%) of those moving into their ‘next home’ are also receiving help from parents or grandparents.

Will Hale, CEO, Key, said: “With advisers foreseeing a surge in first time buyer enquiries, it’s clear that the property wealth of over-55s is increasingly playing an important role in tackling the intergenerational imbalance of property ownership.

“That said, with the older generation often using their savings and pensions to help raise the deposit, there is a real possibility for this generosity to have a sting in its tail. Getting specialist advice which considers all options is vitally important to ensure that they make decisions which will benefit themselves and their families over the long term.”

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