A quarter of parents would charge their children interest on any loan they make to help with a property purchase and the average rate is 4.3 per cent.
The survey from crowdfunding platform UOWN found that 25.6 per cent of Bank of Mum and Dad lenders are willing to charge their children interest and that they would typically do so at a much higher rate than high street lenders.
Average interest rates levied by the Bank of Mum and Dad vary across the country, with the London borrowers paying the most at 4.78 per cent.
Meanwhile parents in the North East offered more generous terms with typical interest rates 3.66 per cent.
Previous research by Legal & General found that the average parental contribution for homebuyers this year is a £18,000.
UOWN founder Shaan Ahmed says: “Whilst the bank of Mum and Dad does have some of the highest interest rate payments out there, it may be the only piece of finance that you can get – all the other banks want to know your income, your assets, whereas for the Bank of Mum and Dad just the simple fact you need a helping hand, which they can lend, is enough. (Having the same DNA also helps!)”
He adds: “Millennials today are facing pressures that haven’t been seen before, so it’s no surprise that parents want to help their children onto the property ladder.
“Ultimately the ‘Bank of Mum and Dad’ is a testament to parents’ generosity and love across the country, but we need to bear in mind that parents face financial pressures just like everyone else, and therefore need a return on their investments.
“It’s advisable to establish at the outset whether the money being given out is a gift or a loan, and it’s also sensible to reach out for impartial advice that will help your family find the most suitable arrangement.”