New figures from specialist later life lender Spry Finance show that the number of older people releasing equity from their own home to help their children get on the property ladder has increased significantly.
The percentage of Spry customers who say they’re using a lifetime loan to gift to their adult children as an early, or ‘living’, inheritance doubled last year – up from 7% to 14% – with most of them stating they had done so to provide a deposit on the purchase of a property.
The average age of inheritance in Ireland is understood to be close to 60 and these 2023 figures from Spry, Ireland’s sole provider of lifetime loans, show that parents want to gift money to their children at a time when they can make the most of it.
Many younger people are questioning whether they will ever own their own home, with money expert Eoin Magee calculating that it now takes 15 years for a first-time buyer to save enough money for a deposit on a property and the associated legal fees.
“As a parent, you always want the best for your kids, and that doesn’t change with age. So, at a time when it has never been a tougher for a young person in Ireland to get on the property ladder, it’s not surprising that our customers are telling us they’re using some of the funds of their lifetime loan to help their children buy their first home.
“They’re making the decision that providing a cash gift to an adult child in their 20s, 30s or even 40s, so they can have a place to call their own is more valuable to them than inheriting many years later," Spry Finance CEO John Moriarty, said.
Gifting a living Inheritance was the biggest change in the use of funds among Spry customers in 2023, however, it was not the most common use of lifetime loan funds.
The most common use of a lifetime loan in 2023 was to supplement insufficient income – with almost half using their loan to boost their pension (24% ) or provide a cash fund living expenses (23% ). The next most common use was refinancing debt, such as an existing mortgage, which applied to a total of 23% of customers. Home improvements was cited as a use by 14% of Spry customers, level with living inheritance, with 2% of customers using their lifetime loan to meet care costs.
“Our customers use their lifetime loan in many different ways and not just for one reason. However, whether they want to retrofit their home, pay off a debt, help out the kids, supplement their income for everyday living expenses, or do something else, what they all have in common is they’ve made the choice to use some of the value they’ve built up in their home to ensure they live a more comfortable life in retirement," Mr Moriarty concluded.
