Parents are demanding their children pay them back money that is lent
Parents want their money back
Friday, 20 Apr 2007 14:34
Increasingly parents are demanding their children pay them back money that is lent.
In the last ten years the number of parents expecting their money back after "lending" it to their children has doubled, according to new figures from Scottish Widows Bank.
In this time there has been a 16 per cent fall in the number of graduates living on their parents but a doubling of the number being forced to take out loans.
But with student loans and soaring house prices, graduates need money more than ever if they are to get onto the property ladder.
Scottish Widows reveals that the average deposit for a graduate buying a home is £16,219, with the average amount borrowed from parents and friends at £12,188.
The bank of mum and dad has now lent children £2.1 billion in the last ten years.
"It is clear that it is becoming more and more difficult for graduates to get on the property ladder without any assistance and with rising interest rates and house prices they need all the help they can get," said Richard Clark, of Scottish Widows Bank.
"Even graduates who have been working for several years are forced to borrow money from their friends and family."
But the terms the bank of mum and dad offers are considerably better than a traditional graduate loan.
Graduates in six has no when the parental loan has to be repaid, and one in eight does not have to pay back the money until they sell their first home.
But as well as graduate loans and taking money from mum and dad, Mr Clark points out there are other ways of getting onto the property ladder.
"House prices and affordability are huge barriers for first time buyers but they should be aware that there are other options available to them – both lenders and the government need to keep working on ways to solve this ever growing problem," he said.