First-time Buyer  

Bank of Mum & Dad are failing to seek advice

They identified shortage of housing supply as a fundamental problem, LSE stated.

Nicholas Morrey, product technical manager at John Charcol, said parents should ensure any money they give is legally classified as a gift if not being repaid back.

"This way, they can legally declare no interest is being charged and that they have no interest in the property," he said.

He added there was a shortage of lenders offering guarantor mortgages, although there had been an increase in joint borrower sole proprietor mortgages, where the parents are put on the mortgage, but not on the title deeds.

Greg Cunnington, director of lender relationships and new homes at Alexander Hall, said his firm had seen the importance of the ‘Bank of Mum and Dad’ in helping first-time buyers in particular get onto the property ladder.

He said: “Lenders have shown some real innovation in this space in recent years, with various lenders now in the later life lending space, as an example, helping parents who want to remortgage to release equity to pass to their children to get on the ladder.

"We have also seen joint borrower sole proprietor options becoming very popular. These solutions come from a mortgage broker knowing the options available that best suit the needs of the overall scenario, and independent legal advice is then also encouraged as part of the process."

Dippy Singh is a freelance journalist