Monday, April 30, 2007
Category:
Secured Loans
Research conducted by the Scottish Widows Bank has shown that the number of parents expecting kids to pay money back has doubled over ten years.
The giving away of money has decreased by 6%, from 38% to 32% in the same period of ten years.
£2.1 billion in parental loans have mounted up with an average amount of £12,188 being borrowed from parents and friends. Scottish Widows Bank has recently calculated that the average deposit for a graduate homebuyer is £16,219 and with one in five graduate non-homeowners are currently living with their parents or friends. Further research has shown that almost four in ten (39%) graduates would not be able to get on the housing ladder without their parents helping them fund a deposit.
The Bank of Mum & Dad however is less like a real bank in repayment terms. One in six graduates has no set time limit in which they must pay their parents back and for one in eight (13%), they won’t pay their parents back until they sell their first home.
Richard Clark, Head of Product Development and Marketing, Scottish Widows Bank commented:
“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.
“Even graduates who have been working for several years are forced to borrow money from their friends and family. While it’s good to see that people are getting help from their loved ones, some of these loans might be leaving the Bank of Mum and Dad empty.”
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Parents who find that their children are in need of a helping hand either before or after leaving university, could consider taking out a personal
secured loan. Payable over a term to suit the borrower, from 5 to 25 years, a personal loan could help pay the first deposit on a home or even help with monthly rent. One of many options to help kids through university and other stages of life, a personal secured loan could provide the funds their kids need. Homeowners should remember that repaying borrowing over a longer term will increase overall interest charges.
