Parents Taking Loans From Their Children
Since banks and building societies lowered the maximum loan to value they are prepared to offer on new home owner loans, particularly to first time buyers, there has been much talk of the “Bank of Mum and Dad” as a large number of parents have provided loans, or even gifts of cash, in order to help their children obtain the home owner loan they require.
But a new survey has found that, like many of the large high street banks, the bank of Mum and Dad has, in many cases, also required loans from their children to bail them out.
The research, which was conducted by money.co.uk, has found that somewhere in the region of 31 per cent of parents have borrowed money from their children at least once during the last twelve months.
On average, parents have borrowed around £15 at a time from their kids and although this does not sound like a lot, it works out as being somewhere in the region of £54 million worth of loans over the course of the year.
It seems, however, that parents are generally a better bet than many of the high street banks, as around 92 per cent of them have already repaid their loan debts to their children, although 7.6 per cent admit that they still owe their children money, which works out as a total loan debt of around £4 million.
Chris Morling of money.co.uk said “I’m sure we’ve all been caught short of cash from time to time, for instance when a window cleaner or milk man needs paying. In those situations, there’s no shame in borrowing a few pounds form the children, providing it’s only temporarily. All the same, it’s amazing how all those relatively small loans add up when you look at the country as a whole.”
