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Gifting Family with Equity Release Could Take 12 Years off First Time Buyer Mortgage Terms

Updated: 5 days ago

equity release gifting

Equity release gifting could help younger generations pay off their mortgages up to 12 and a half years sooner, according to the latest data from More2life.

The data showed that in London it could be paid five years sooner, while in the south a little over eight years sooner and by 12 and a half years in the East Midlands.

More2life found that the average amount of equity release gifted for a deposit is £69,376.

By sharing the average amount of equity gifted to fund a deposit with children or grandchildren, More2life says that over-55s could help them to secure a lower loan-to-value, making the mortgage rate cheaper.

Should the first-time buyer be in a position to pay the same monthly repayments as someone who purchased without level of deposit, savings could equate to as much as half the span of a mortgage without gifting in areas such as the North of England.

Meanwhile, in areas with the highest house prices such as London, a first-time buyer could save 20%, or five years, allowing them to start putting increasing savings of their own towards other expenses.

Using a mortgage calculator, more2life found the average financial cost over two and five years for a mortgage purchased at a standard fixed rate of 90% LTV over 25 years.

To calculate the savings unlocked by an equity release enhanced gift, more2life ran the same scenarios but added £69,376 to the first-time buyer’s initial deposit, which changed the LTV and both cut the mortgage’s lifetime cost and the time spent paying the capital borrowed to the lender.

More2life chief executive Dave Harris says: “We are now at a point in the UK property market where as many as 75% of Britons believe homeownership is out of reach. However, some members of the older generation are in a position to change this by augmenting the buying power of first-time buyers through their own home equity.”

“Shaving as much as 20% from the time taken to pay off a mortgage in London, one of the most competitive property markets in the world, demonstrates just how useful this tool can be for supporting family and loved ones.”

If you would like to find out how you can help your family with equity release, please contact us or call on 0800 046 9776.

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