April 14, 2010

UK: Adults finding it hard to stop turning to grandparents for financial help

. LONDON, England / The Daily Mail / News / April 14, 2010 Rise of the Bank of Gran and Grandad: Adults finding it hard to stop turning to grandparents for financial help By Becky Barrow As children, many of us could rely on granny or grandad to slip us a few extra sweets or a bit of extra pocket money. But adults are finding it increasingly hard to grow out of the habit of turning to grandparents for financial help, research shows. The number of families who are begging for money from the 'Bank of Granny and Grandad' has risen sharply. Many grandparents give their grandchildren money, but adults are finding it hard to stop relying on their elderly relatives for financial help Millions have had their finances crippled by the recession and the combination of pay freezes, pay cuts or redundancy and the rising cost of living. Retirees are using their homes as cash machines, taking money out of the value of their property to help their grown-up children or grandchildren - a process known as equity release. Between January and March, retired homeowners over the age of 65 withdrew £217million from their homes, nearly a fifth more than during the same period last year, a report found. They took out an average of £43,090 each. The report, from the equity release firm Key Retirement Solutions, said the money was 'increasingly being used to help or treat family and friends'. More than a third said they were taking out the money to help their family, compared with less than a fifth at the same time last year. This was the second most popular reason for equity release, behind 'home and garden improvements'. Debt advisers the Consumer Credit Counselling Service yesterday said it had also spotted a growing trend for grandparents to help out their children or grandchildren financially. Dean Mirfin, business development director of Key Retirement Solutions, said: 'It is striking that pensioners are more confident about using their wealth to benefit others, rather than having to use the money for themselves.' But equity release schemes can be dangerous. The most common complaint is that elderly people do not tell their loved ones that they are doing it. When they die, their children - who had been expecting to inherit the family home - find that it has to be sold to pay back the money, including the large interest bill. The over-65s have a total of £765billion of equity in their homes. This is the value of the home excluding mortgage debt. But with average salaries of about £25,000 and the average house price nearly £170,000, millions of young people cannot afford to buy a home. [rc]