Planning & protection
There is a growing tendency among older Britons to use the wealth held in their property to help younger generations become first time buyers, new research suggests.
Homeowners, particularly those who are mortgage-free, are planning to use investments, as well as their property, to help other family members move onto the property ladder.
The research findings show that the average age people pay their mortgage off is 51. After this, property and other wealth tends to start being spread through the generations. Of the respondents, 14% say they have already helped their children to become first-time buyers.
A further 19% say they will ‘definitely or probably’ do this. In 2016, more respondents (19%) said they had already helped their children to become first-time buyers, yet fewer (13%) were ‘definitely or probably intending to’ compared to now.
The research also highlights an increase in the number of people ready to help other family members, not just their own children. In 2022, 5% say they have already helped their grandchildren become first-time buyers, with a further 20% saying they are definitely or probably going to.
This proportion has shifted upwards in the last six years. In 2016, 3% had already helped their grandchildren to get onto the property ladder and 14% intended to. The same pattern emerges when it comes to helping members of the wider family to buy a home. In 2022, 3% say they have already helped with this, and a further 9% intend to, compared with 2% and 3% respectively in 2016.
It’s no secret that many younger people tend to encounter difficulties when seeking to enter the property market for the first time. The degree to which existing homeowners are now prepared to use their own wealth to help their other family members onto the property ladder has increased notably over the last six years.
The amount of money older relatives are giving to younger generations has also increased, with the typical total amount given now standing at £31,398.63, 25% higher than in 2016. Increasingly, older homeowners are a source of funding for their children and their grandchildren, and are using a greater variety of means to help younger family members out.
There is also a noticeable shift towards using property wealth over other sources of income to provide help to other family members hoping to buy a home. In the research, the use of financial help sourced through property wealth has more than doubled compared with six years ago, with 40% using property assets in a number of ways, led by downsizing and equity release.
In 2016, most financial help was sourced through using savings and investments to provide money for a deposit (71%), or to buy a property outright (10%). A further 3% cashed in pensions or used pension savings to enable this. Property wealth was used to help other family members in 17% of cases, mostly by releasing capital through downsizing or equity release.
Clearly more and more people are willing to use their property wealth in a variety of ways, and this is starting to become the norm for those wanting access to cash to help other family members. Six years ago, fewer than one in five people used wealth held in their property to assist other family members and this has now grown to 40%.
It is becoming increasingly accepted that wealth held in property should be considered part of someone’s total assets and can be used for a variety of purposes, including to help younger family members buy a home like their parents and grandparents did.
When it comes to choosing the right first-time mortgage, we understand that everyone’s circumstances are different.
To discuss your mortgage options, get in touch with a Fairstone adviser today.
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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
 Aviva research conducted for Aviva byCensuswide April 2022. 1,507 general consumers aged 45+.
 Aviva Real Retirement Report conducted for Aviva by ICM Unlimited April 2016. 1,506 general consumers aged 45+.