The ‘bank of mum and dad’ is 10th biggest mortgage lender

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By Nicola Furmston

It has been announced that The Bank of Mum and Dad is now the 10th biggest mortgage lender in the UK, behind the Clydesdale Bank.

Parents are anticipated to provide approximately 25% of all mortgage lending in the UK this year. This is to bridge the funding gap experienced by first time buyers, between the amount they can borrow commercially and the actual purchase price of the property they want to buy.

Parents wanting to lend money in this way need to be very careful to make sure they have the correct paperwork in place in order to ensure that a loan is properly evidenced. On a divorce a parental loan is often treated as a ‘soft’ loan ie one that is not really repayable as there is no hard evidence of loan and repayment terms or charge on the relevant property. A soft loan is easily dismissed as irrelevant, increasing the net equity in a property when assets are valued on divorce. This can mean that money, graciously lent, is eventually lost to the hands of a spouse.

Nicola Furmston is a solicitor and head of the Family team at Barker Gotelee.

Family Solicitors in Ipswich – for more information on our range of legal services, please call the team on 01473 611211 or email