Intergenerational mortgage customers need advice too
Paul Thompson, CEO Cavere Group, writes a regular column in Mortgage Introducer Magazine.
Since the start of the year we have seen the rise of a new breed of loan, the intergenerational mortgage. The aim of this product is to help families pass down assets to younger generations, by providing parents and grandparents with the ability to use their own property to help their children and grandchildren get on the housing ladder.
Today, 50-70 year-olds, who typically bought their first homes in their 20s, are richer than they could have imagined thanks to long-term rising property prices. According to the Office of National Statistics a property purchased for an average of £12-£13,000 in 1976 would be worth approximately £292,000 today. Intergenerational mortgages provide family members with a way to put up the equity in their property as security on the purchase of a home for a younger family member.
Parents and grandparents putting up their home as security for the loan are putting not just their property but their entire financial security at risk, a nest egg they have worked for and paid for throughout their lives, therefore for the new breed of intergenerational mortgage clients good protection advice is invaluable.