One in five banks of Mum and Dad make shocking sacrifices

Bank of Mum and Dad risks retirement and long term care to help offspring

Bank of mum and dad

Parents are making major sacrifices in order to get their children onto the property ladder, and in some cases are paying a huge price. Many of them don't feel they have any other option - because a third feel under pressure to 'do the right thing' - no matter what it costs them.

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A study, by Clydesdale and Yorkshire Bank, found that almost one in five parents who have given or lent money to their children to help them onto the property ladder have sacrificed their standard of living in order to do so. Meanwhile, 14% of them have sacrificed their retirement plans.

A quarter have given up holidays, one in five put plans to move or improve their property on hold, one in five delayed buying a new car, and one in five spent money they had put aside in case they needed long term care.

The nicer things in life have been ditched too - including the fact that 14% have sacrificed eating out, 13% new clothes and jewellery and 10% have stopped buying gifts for other people.

It's not surprising they are having to give these things up, considering the sums of money involved. Some 42% had either lent or given away up to half of their annual income - and in some cases more.

Fergus Murphy, Customer Value Director, at Clydesdale & Yorkshire Banks, said: "The Bank of Mum and Dad phenomenon is well understood, however until now the impact it has on parents' personal spending habits and financial planning hasn't been clear. The reality is a large proportion feel under pressure to provide finance to their children and are having to sacrifice their own material well-being and long-term financial security."

What can you do?

While the urge to help your children is instinctive, it doesn't make sense to do so at the cost of your own financial security. For parents who are struggling to help their kids, there are alternatives to simply giving them the cash.

You can lend them the money, with a structured repayments schedule. That way, if you spend money put aside for long term care, it can be repaid by the time you are likely to need it.

If the children cannot afford to make repayments, then you can take a stake in the property. They can repay this further down the line, when they have built up enough equity in the property to remortgage, or when they sell up. It's worth getting an agreement in writing as to when and how they will repay, so everyone knows where they stand.

Alternatively, instead of parting with any cash at all, you could let them move back in. You could agree to put a roof over their head for a year or 18 months - which should be enough time for them to save enough for a deposit.

There are also joint products you can get, which allow you to provide a safety net for them without an outlay. This may enable your offspring to borrow more - or to find a lender wiling to take them on. The products range from guarantor mortgages (where parents commit to paying the mortgage if the children default) to offset mortgages, where your savings are offset against the balance of the mortgage.

Finally, bear in mind that helping your offspring buy a home isn't compulsory. If you cannot afford it then nobody has any right to expect it. There are alternative forms of help for young buyers - from Help to Buy to shared ownership and the Lifetime ISA - so your offspring are not on their own.

But what do you think? Would you say no, or would you sacrifice our own lifestyle to help your kids get onto the property ladder? Let us know in the comments.

UK property hotspots 2017 (according to Zoopla)

UK property hotspots 2017 (according to Zoopla)