The Bank of Son and Daughter

We've only had one case like this, although we can see it happening more and more in the future. There are still people out there with interest-only mortgages. They have no endowment anymore as this was cashed in years ago, and no viable way to repay the mortgage at the end of the term. For them, the options are to look at a repayment mortgage, perhaps with their children acting as a joint-borrower if required, or equity release/retirement interest-only mortgages. For any adult children considering helping their parents, it's important to consider the impact this will have on their own borrowing capacity in the future, as this could be seriously affected.

We've helped some clients combine their incomes and purchase large properties so they can live together as extended families. There are several reasons for this: firstly, as mentioned, parents' wealth is often not where it was expected to be as a result of historic investments; secondly, the price of property these days means that to buy the type of property people want requires higher incomes and deposits, longer terms plans where parents may need assistance into older age; and third, during Covid so many people spent so much time apart and away from each other that they realised what they missed and therefore wanted to either move closer to each other or just go to the extreme of moving in together.

We have seen plenty of the Bank of Mum and Dad in reverse of late, namely children supporting their parents, whether they have been paying the mortgage unofficially or have simply purchased the property from their parents and allowed them to reside in it. However, in any case where there is some financial support for parents, I would try to avoid any guarantor-type facility as this will have a negative effect on their children's own family mortgage capabilities. There are plenty of retirement interest-only and equity release mortgage solutions that could be more suited to this situation, where the interest can be paid each month in full or in part if affordable. As always, specialist mortgage broker advice will help steer the family in the right direction.

More parents are coming to the end of their mortgage terms and finding they cannot refinance to another bank or building society because of their age and insufficient income. This has led to more adult children helping their parents refinance so they can avoid expensive equity release deals. Lenders like Metro Bank are doing more reverse joint borrower sole proprietor mortgages where the adult children are using their incomes so their parents can stay in their homes. This means they can also avoid reverting onto super expensive standard variable rates.