One in six parents who remortgage their property use the opportunity to give money to their grown-up children, price comparison site MoneySuperMarket has found.
The average financial contribution is £9,050 per child, with nearly a 10th (9%) giving over £20,000.
Over a third (34%) of grown-up children put the money towards a deposit on their own home, while others use it to go travelling (11%), buy a new car (11%), or pay for ‘everyday essentials’ (9%).
Rachel Wait, consumer affairs spokesperson at MoneySuperMarket, said: “Our research found that 15% of parents released equity when they remortgaged to help their children.
“However, you’ll only be able to do this if your property has gone up in value and you’ll need to be sure you can afford to keep up with your new repayments.
“It’s also important to factor in the costs associated with remortgaging, such as arrangement fees which can be as much as £2,000, as well as legal, admin and valuation fees. Try to be realistic – only release equity to help your children with life events if you can really afford to do so.
“Also keep in mind that because a mortgage takes so long to pay back, remortgaging may not be the right option for everyone – there may be cheaper ways of getting a cash sum. It’s important to look at all options and shop around before making a decision.”
When asked why they give away money, 32% of parents said they’d prefer to accumulate debt themselves, rather than create additional money worries for their child.
Over a quarter (26%) said their son or daughter needed the money quickly and a further 22% said their child was already in debt with their bank and didn’t want to add to it.