The “Bank of Mum and Dad” (BOMAD) is an increasingly popular lender when it comes to buying a home. According to research from LV, parents will help to fund 317,000 homes in 2018, up 3% from the previous year.
As you might expect, London buyers receive more help than any other area. Although under-35s are more likely to receive help from BOMAD (almost 3 in 5 according to the LV research), some older buyers are also leaning on the “bank” with 20% aged between 45 and 55 receiving help.
If you would like to use equity release in order to provide financial help to a family member looking to purchase property, there are many things to consider and you will need expert advice from a qualified equity release adviser. You may also need advice from a tax specialist.
Most equity release advisers, including our advisers at Access Equity Release, offer a free initial consultation. You are under no obligation to go ahead and an adviser will assess your circumstances carefully to ensure that releasing equity is appropriate. They will also guide you through the advantages and disadvantages to make sure that you are fully informed. This gives you the opportunity, along with your adviser, to work out if releasing equity is the right choice for you and your family.
Things you need to consider:
- Releasing equity reduces the value of your estate, leaving less for beneficiaries to inherit. You may want to seek advice from Wills and Estate Planning experts. We can refer you. Your Lasting Power of Attorney is important too.
- You may want to review your Will to ensure that your estate is distributed fairly, taking into account the equity released to help purchase property.
- Equity Release is only available to home owners aged 55 and over and the youngest must be at least 55 years old. You must both agree to release the equity and must both be of sound mind. If not and there is no Lasting Power of Attorney in place, you will not be able to release equity. One example is if one of the home owners suffers from dementia.
- Affordability is a big factor and your equity release adviser will not make a recommendation to you for equity release if it is in any way unsuitable in your circumstances.
- Releasing equity is a decision for the home owners and you should not feel pressured to help loved ones, no-matter what your intentions for inheritance after you die.