It is a sign of the times that many parents are passing an
inheritance to their children early to help the children on to the
property ladder. The media now use the term 'BoMaD' –
the Bank of Mum and Dad.
A recent report by Legal and General, in association with the
Centre for Economics and Business Research, has suggested that
BoMaD contributed £5 billion in 2016 to property purchases
totalling £77 billion overall. This made BoMaD the equivalent
of a top ten lender.
There are a range of options available to parents wishing to
help their children, each with practical and taxation
consequences.
If you do not have capital to help with a loan or gift, it may
unlock a better mortgage deal for your child if you were able to
act as guarantor, though the obvious risk is that you could be
liable for repayments if your child defaults.
