Latest news with #BankofMumandDad
Metro
3 days ago
- Business
- Metro
How much you actually need to save for your first home, wedding and retirement
Whether you apportion £20 notes into physical envelopes or use a number of different savings accounts, putting your money into different 'pots' makes saving more successful. Behavioural science expert Neil Bage says this is due to a phenomenon known as 'mental accounting', whereby your mind treats money differently if you decide what it is for. 'Give your money a purpose – like a holiday fund, an emergency stash or a 'future me' fund – and you're way more likely to actually save it,' he says. Technology makes pot-based saving easier than ever. Many banks and building societies allow you to have several different savings accounts and even to rename them so that you're always clear about their purpose. But how many pots should you have? And how much do you need to put into them? Read on to find out how to apportion your savings and make every pot work hard for you. How much might you need? The average first homeowner puts down a deposit of £68,154, says UK Finance, voice for the banking and finance industry. Depending on where you live and the type of home you buy, the sum you need could be higher or lower. To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video Is help at hand? While many people might turn to the Bank of Mum and Dad for help with a home deposit, the government can also provide a helping hand. The Lifetime Isa, or Lisa, allows you to put money away to spend on a first property with a bonus added from the government. As with any other Isa, the money you put in grows tax-free, and the government will add 25 per cent to what you put in. There are restrictions. You can only use the money for buying your first home, not a subsequent one, and that home can't be worth more than £450,000. You're limited to putting £4,000 a year into your Lisa, with the government adding a maximum bonus of £1,000. If you don't use the money for a first home, you can either use it for retirement by taking it out over the age of 60, or you can take it out but pay a penalty which works out higher than the government bonus. You can save a bigger sum of course, in a fixed-term savings account, and the longer you are prepared to leave it, the better the interest rate tends to be. It may be sensible to lock away some money in a fixed rate account in return for better interest rates over time. Automate monthly payments into your house deposit pot, to ensure you meet your targets. How much might you need? Most of us need to save into a pension for our retirement. According to the Pension And Lifetime Savings Association (PLSA) we'll need a pot of between £330,000 and £490,000 to have a moderate retirement. Is help at hand? Those figures sound daunting but fortunately, unless you are self-employed, your employer will also pay into your pension, helping it to grow, while the taxman will work with you, too, by adding back the income tax you've paid on your pension contributions. The earlier you start, the easier it will be. Having a pension scheme will ensure you get tax back and with employer contributions you'll be able to benefit from compound growth over time. How much might you need? The cost of a week in the sun has been rising faster than inflation, up to £1,166 for a week in Turkey all-inclusive or £914 for a week in Spain, according to Travel Supermarket. Putting away money each month towards a holiday like this makes the bill less painful later. For a family of four, putting £333.33 a month into a savings pot would give you £4,000 after a year, while a single person might get away with £83 a month for a £1,000 holiday. Is help at hand? Regular savings accounts might give your holiday cash a boost. These offer a high interest rate for your savings in return for you putting away a certain amount every month. You are rewarded for consistency but can only put away a certain lowish amount – perfect for holiday spends as the accounts usually pay the interest after a year. As well as using a Regular Saver account to benefit from interest, make sure you automate your payments, so you don't forget one and you've plenty in your holiday fund when you come to book. How much might you need? We spend more than £774 a year each on Christmas, research from Yorkshire Building Society suggests. But many of us go into debt to pay for it and are still paying it off when the next festive season rolls around. Saving in advance can take the sting out of it. You'd need to put £64.50 a month into a Christmas pot to cover this amount over a year. Is help at hand? Some financial institutions offer specific Christmas savings accounts, such as Yorkshire Building Society's Christmas e-saver, which allows you to put away £150 a month and get five per cent interest. Unlike Christmas savings schemes offered by supermarkets and other organisations, with a bank or building society your cash is protected. As well as saving into your pot regularly, you could declutter unwanted gifts from last year on Vinted, eBay or Facebook Marketplace and add what you make to it. How much might you need? More Trending Figures from wedding planning website National Wedding Survey suggest the average cost of the Big Day is now £23,250, meaning a couple who want to pay outright must put away £1,162.50 a month over an average 20-month engagement. Is help at hand? The Hitched survey suggests that parents shell out £14,647 per wedding on average. But not everyone wants to turn to the Bank of Mum and Dad. An alternative is to cut costs by having a smaller do, holding your wedding on a weekday or choosing cheaper catering options. Regular savings accounts may have limits that are too small for monthly wedding savings but whatever account you choose to save into, make sure you keep an eye on the interest rate and move your money if the rate drops. Consider an account with a fixed rate to guard against sudden falls in the Bank of England interest rate, and if you can use your Isa allowance – currently £20,000 a year each – this will help ensure the taxman takes less of your wedding saving View More » MORE: I have to hide washing-up liquid in my room because of my stingy flatmate MORE: Powder rooms with personality – 7 bathroom renovations to inspire your next DIY MORE: Readers discuss Corbyn's 'own goal', Doctor Who and gorilla costumes Your free newsletter guide to the best London has on offer, from drinks deals to restaurant reviews.
Times
24-07-2025
- Business
- Times
Should you help your children to buy a home?
Homeownership is a distant dream for many, despite efforts by the Treasury and regulators to loosen lending rules. The Bank of Mum and Dad now helps more than 50 per cent of first-time buyers on to the property ladder, according to the estate agency Savills. But is this a necessary act of generosity or is it helping to fuel the housing crisis? We hear both sides of the argument. The Bank of Mum and Dad is not a benevolent institution. It is an inequality engine. Helping your kids to get on the property ladder may feel like good parenting, but it fuels a system that rewards birthright over merit and privilege over effort. And this is not just about fair play — although that matters. It is about distortion. Housing should be about what you earn, not who you are born to, and yet we're hurtling towards a feudal set-up where access to shelter hinges on parental wealth. In 2023 more than half of first-time buyers had financial help from family — so much for social mobility. • Read more money advice and tips on investing from our experts Meanwhile, the parents are often the ones doing the sacrificing. Draining pensions, dipping into savings, compromising their retirement or their future care needs to prop up a politically induced broken housing system. Others face tricky family politics. What if one child gets help and another doesn't? Suddenly the family WhatsApp group turns into a minefield. And don't forget the long-term cost, because if that gifted deposit pushes mum or dad below the threshold for local authority-funded care, the state picks up the tab. So we all end up paying for this bad idea. It also warps the market. When we inflate demand from cash-boosted buyers, prices are kept high and the truly independent are shut out. It's no coincidence that areas with the most intergenerational support are often the least affordable — and the most resistant to change. Many of those lobbying against new homes do so under the guise of 'heritage' or 'environmental protection'. All the while ignoring the paradox: if you really want to help your children, stop blocking homes for them to live in. This is the real betrayal of Britain's working class. We have normalised parental bailouts instead of fixing the system. Homeownership should be a reward for work and not a birthright. Parental gifts may be well intentioned. But they entrench inequality, destabilise retirement and price out millions. Let's call it what it is: a personal favour that perpetuates a national failure. • Rachel Reeves is right, but she is walking a tightrope — with our money Helping your children get on the property ladder is a deeply personal decision — but if you're in a position to offer support, I'd argue it is a good idea. Intergenerational fairness is one of the strongest reasons why helping your child buy a home is the right thing to do. Many parents benefited from a housing market that has since become vastly less accessible. In the 1980s the average age of a first-time buyer was about 27. Today it's closer to 34 — and that's often with help. Property prices have risen much faster than wages, making it almost impossible for many twentysomethings to buy without a financial leg-up. If you plan to pass on wealth to the next generation, why not do it when it could make the biggest difference? An inheritance often arrives when adult children are already financially stable or even nearing retirement themselves. But helping them in their earlier years will allow them to stop wasting money on rent and start investing in a secure, long-term home. A study by the HomeOwners Alliance found that 54 per cent of homeowners with adult children had either already helped them buy a home or expected to in the future. Among homeowners whose children do not yet own property, 59 per cent worried about their chances of ever buying a home. But help doesn't have to mean writing a big cheque. There are several ways in which parents can support their children without handing over large sums. You might consider acting as a guarantor on a mortgage or getting a joint mortgage with your child. There are also distinct financial advantages to the so-called Bank of Mum and Dad. A gift used for a house deposit is inheritance tax-free, provided you live for seven years after giving it. This can also reduce the size of your estate and potentially lower inheritance tax on other assets. Helping with a deposit means your child may qualify for better mortgage rates, so that they have lower monthly repayments. A larger deposit can also help them to buy a better home — whether that means a larger space or a more suitable location — and reduce the need (and cost) of them moving again soon. Of course, this all depends on your own financial situation. And one final piece of advice: be fair. Helping one child and not others can lead to family tensions. If you're lending, be clear and be consistent.
NZ Herald
23-07-2025
- Business
- NZ Herald
Retirees lean on children for financial support on top of superannuation
Editorial The Bank of Mum and Dad has for years been a lifeline for young Kiwis trying to get ahead. Parents used their equity from decades of rising property values to help their children afford home deposits, bridging loans, or clear debt owed to the banks. But a new financial institution
Times
23-07-2025
- Business
- Times
Should you help your children buy a home?
Homeownership is a distant dream for many young people, despite recent efforts by the Treasury and regulators to loosen lending rules. The Bank of Mum and Dad now helps more than half of first-time buyers on to the property ladder, according to the estate agency Savills. But is this a necessary act of generosity or is it helping to fuel the housing crisis? We hear both sides of the argument. The Bank of Mum and Dad is not a benevolent institution. It is an inequality engine. Helping your kids get on the property ladder may feel like good parenting, but it fuels a system that rewards birthright over merit and privilege over effort. And this is not just about fair play — although that matters. It is about distortion. Housing should be about what you earn, not who you are born to, and yet we're hurtling towards a feudal set-up where access to shelter hinges on parental wealth. In 2023 more than half of first-time buyers had financial help from family — so much for social mobility. • Read more money advice and tips on investing from our experts Meanwhile, the parents are often the ones doing the sacrificing. Draining pensions, dipping into savings, compromising their retirement or their future care needs to prop up a politically induced broken housing system. Others face tricky family politics. What if one child gets help and another doesn't? Suddenly the family WhatsApp group turns into a minefield. And don't forget the long-term cost, because if that gifted deposit pushes mum or dad below the threshold for local authority-funded care, the state picks up the tab. So we all end up paying for this bad idea. It also warps the market. When we inflate demand from cash-boosted buyers, it keeps prices high and shuts out the truly independent. It's no coincidence that areas with the most intergenerational support are often the least affordable — and the most resistant to change. Many of those lobbying against new homes do so under the guise of 'heritage' or 'environmental protection'. All the while ignoring the paradox: if you really want to help your children, stop blocking homes for them to live in. This is the real betrayal of Britain's working class. We have normalised parental bailouts instead of fixing the system. Homeownership should be a reward for work and not a birthright. Parental gifts may be well intentioned. But they entrench inequality, destabilise retirement and price out millions. Let's call it what it is: a personal favour that perpetuates a national failure. • Rachel Reeves is right, but she is walking a tightrope — with our money Helping your children get on the property ladder is a deeply personal decision — but if you're in a position to offer support, I'd argue it is a good idea. Intergenerational fairness is one of the strongest reasons why helping your child buy a home is the right thing to do. Many parents benefited from a housing market that has since become vastly less accessible. In the 1980s the average age of a first-time buyer was about 27. Today it's closer to 34 — and that's often with help. Property prices have risen much faster than wages, making it almost impossible for many twentysomethings to buy without a financial leg-up. If you plan to pass on wealth to the next generation, why not do it when it could make the biggest difference? An inheritance often arrives when adult children are already financially stable or even nearing retirement themselves. But helping them in their earlier years will allow them to stop wasting money on rent and start investing in a secure, long-term home. A study by the HomeOwners Alliance found that 54 per cent of homeowners with adult children had either already helped them buy a home or expected to in the future. Among homeowners whose children do not yet own property, 59 per cent worried about their chances of ever buying a home. But help doesn't have to mean writing a big cheque. There are several ways in which parents can support their children without handing over large sums. You might consider acting as a guarantor on a mortgage or getting a joint mortgage with your child. There are also distinct financial advantages to the so-called Bank of Mum and Dad. A gift used for a house deposit is inheritance tax-free, provided you live for seven years after giving it. This can also reduce the size of your estate and potentially lower inheritance tax on other assets. Helping with a deposit means your child may qualify for better mortgage rates, so that they have lower monthly repayments. A larger deposit can also help them to buy a better home — whether that means a larger space or a more suitable location — and reduce the need (and cost) of them moving again soon. Of course, this all depends on your own financial situation. And one final piece of advice: be fair. Helping one child and not others can lead to family tensions. If you're lending, be clear and be consistent.
Telegraph
03-07-2025
- Business
- Telegraph
What you need to know before giving your child a house deposit
The 'Bank of Mum and Dad' is a big business. Last year, gifts and loans from parents came to over £9.6bn, according to property firm Savills – with the money commonly being spent on house deposits. The research, from May this year, found 173,500 first-time buyers were given assistance in 2024 – around half of the total number to have bought their first home – with gifts averaging £55,572 each. Parents stumping up large sums of cash is on the rise. The Bank of Mum and Dad (Bomad) has provided £38.5bn of assistance over the past four years, up 71pc compared to the previous four years. Despite it being so commonplace, giving money to your children isn't always straightforward. How much should you give? When should you give it? Could you end up accidentally landing your offspring with a tax bill? Here, Telegraph Money answers these questions in a full guide to the Bank of Mum and Dad. How much should you give your children? When should you give the money away? What do lenders need to know about a 'Bomad' deposit? Do children have to declare the gift to HMRC? What about inheritance tax? How much should you give your children? The golden rule here is that any contribution should be affordable – this means it will vary from person to person. Crucially, you need to ensure any gift won't put your own retirement or financial stability at risk.
