Thousands of UK homebuyers are reliant on loans from the bank of mum and dad and subject to unreasonable terms and conditions, says a new report.
A report published by mortgage firm Generally Legal ( G&L ) has revealed that UK parents have lent an estimated £6.3bn, making the bank of mum and dad the UK’s 10th largest mortgage lender.
G&L is calling on the Financial Conduct Authority ( FCA ) to investigate what they describe as an “unregulated financial institution” over claims that many borrowers are subject to “unfair and unreasonable” terms and conditions.
John, who graduated university with a 2:2 in interpretive dog grooming and now writes a satire blog, was helped onto the property ladder with a £45,000 loan from his parents but is now regretting not reading the small print.
“I knew I’d never be able to afford my first three bedroom mid-terraced house in the nice bit of Peckham without a loan,” John told us.
“All the banks turned me down, for some reason, and it turns out there’s not much call for interpretive dog groomers, although I blame Brexit for that.
“Luckily, Mum and Dad are minted, thanks to Dad spending his entire adult life in some soul-crushing insurance office, and offered to lend me some cash.”
John says it was only after he accepted the loan that his parents started enforcing the terms and conditions, that he says “were hidden in the small print”.
“Apparently clause 3.7-f says I need to call Mum at least twice a week for a 30-minute chat and 5.8.4-g requires me to report to their house for Sunday lunch on a fortnightly basis.
“Oh, and they want me to pay them back so they can retire to Spain.
“It’s so unfair.”