Brits 'helped on to property ladder by parents'

Publication date | 30/06/2009

An increasing number of British parents are taking advantage of low property prices and are purchasing a home for their children, a report has revealed.

Estate agents have noted a rise in mums and dads giving their loved ones a helping hand when it comes to the property ladder, with many driven by the poor returns on their savings accounts, the Daily Mail said.

Many individuals are buying two-bedroom properties rather than one-bedroom ones and renting out the extra room to provide much-needed cash while the 0.5 per cent interest rate continues to negatively impact on their savings.

Stephen Noakes, director of mortgages at Lloyds, told the newspaper that parents can help their offspring obtain a bigger mortgage and therefore a more attractive home.

"But parents who are stretching to help their child on the housing ladder should tread carefully. The housing market is volatile and prices could fall further, so experts warn against remortgaging your own home or getting into debt just to help your children get a property," the publication advised.

Parents who want to help out their children with buying a home - but want to avoid debt - may have researched which options are open to them to obtain the funding required.

Britons who have already considered offloading an underachieving endowment policy may have decided that surrendering it is an option.

However, a spokesperson for the UK's biggest buyer of endowments, aap, said that many people may not realise that selling an endowment is another option.

If aap decides to make an offer on an endowment policy it will always pay more than the surrender value, he added.

Homeowners who have decided to offload an unwanted endowment policy may do so in order to raise the cash required to help buy a home for their children, without topping up their debt.

They may then be able to rent out a room to obtain additional income.

Younger Britons could also require their parents' help to clear their student debt. According to the Press Association, the Student Loans Company lent £4.2 billion in 2008-09, leaving many young people in the red before they have even started earning.