At a time when estate agents are warning that house price affordability is reaching a crisis point it seems that more people are turning to their grandparents in order to get a foot on the property ladder. The Bank of Gran and Grandad has donated a total of over £37bn in funds to their grandchildren and one in ten grandparents say this money was to be spent on a deposit for a house.
The generous donations look set to continue as the research from Saga shows that a further third of grandparents are still considering or intending to give a financial gift and one in ten are considering lending money to grandchildren. The typical donation from Grandparents is £9,365, with those in London and the South East giving the largest deposits, although grandparents in Yorkshire are some of the most likely to gift to their grandchildren.
Grandparents say that they view the gifts as an early inheritance, with over half saying that they would rather see their relative enjoy the money than wait to leave it as an inheritance. In keeping with this generous spirit many grandparents do not specify what the money should be spent on; four in ten are happy for it to be spent on whatever their grandchildren would like to buy themselves. Other expenditure from the Bank of Grand and Grandad goes on education, (23%), holidays (13%), driving lessons (12%) and house deposits (9%).
A spokesman for Saga Money, commented: “Most of the money grandparents are gifting is coming from their cash savings, so whatever small amount of interest they are missing out on is clearly outweighed by the joy they get by seeing their grandchildren benefitting from the money.
“If you are giving your grandchildren support as a loan rather than as a gift it pays to take a few sensible steps so there is no awkwardness later on,. Only half of grandparents say they discussed repaying the loan with their grandchild, our advice is to be upfront about the conditions of the loan including how you would like the money repaid in order to avoid difficult conversations at a later date.
“Our customers are increasingly turning to gifting money through equity release in order to help grandchildren onto the property ladder. On average they take £33,000 out of their property in order to give to family.”
Saga Magazine has put together some tips for people considering lending or giving financial gifts to their family, for the full article please see www.saga.co.uk/magazine/money/
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