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FMNL6139 - Print advert for Mortgage Introducer_Layout 2 25/01/2012 11:39 News Review: Housing

BOMAD needs support by

Ben Thompson, managing director of the Legal & General

Mortgage Club

During my time working in this sector I’ve seen banks come and go, most notably in the past few years. Aside from outright collapses (Icesave any- one?), there have been major re-brands, mergers, takeovers

and of course the emergence of new players such as Metro Bank and Virgin Money, which purchased Northern Rock at the end of last year. But there’s one bank that seems to be gaining influence with

each year - and increasingly becoming the lender of choice for young first-time buyers desperate to get on the properly ladder. This bank is not regulated and has absolutely no credit

checks and or fixed lending criteria. And yet around 84% of first-time buyers aged under 30 are estimated to be receiving financial help from it, according to the Council of Mortgage Lenders. I am, of course, referring to the Bank of Mum and Dad – or BOMAD. As things get tougher for first-time buyers, parents are increasingly being called upon to help out. For those who aren’t lucky enough to have access to this valuable lending re- source, the average age of buying a first property rises to 37. It is largely thanks to this unofficial bank that the first-time

buyer market hasn’t gone the way of the dodo. With traditional lending under pressure from the fallout of the credit crunch, BOMAD has kept its coffers flowing, proving a lifeline for first- time buyers across the country. Is this type of lending sustainable and to what extent has it distorted the housing market already? The Consumer Credit Counselling Service believes that pa-

rental financial support is one of the main contributors to the debt problems among people aged 55 and over, who are rob- bing Peter to pay Paul. The BOMAD is good for first-time buyers and it’s good for the housing market – but it has to be supported and managed properly. As a sector, we need to be advocating for safer inter- generational lending that protects all parties and is sustainable for the foreseeable future. We also need to look ahead and encourage younger clients

to save for their offspring. This may seem an impossible task considering how little we manage to put by for ourselves as a country. But there are plenty of products out there designed for parents who want to plan for the future. It may not be your core business, but borrowers will appre- ciate the advice and if they take you up on it, this could have lasting benefits for the sector and housing market of tomorrow. Banks come and go but the BOMAD is one lender than no

one wants to see collapse. The financial and human conse- quences would be truly devastating.

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That’s why when looking for a lender to satisfy the complicated financial needs of professional landlords, those in the know choose Paragon Mortgages. If it’s a limited company, an HMO, a multi-unit property or a customer who already owns a large portfolio, remember who to choose. 0845 849 4057

Buy-to-let for serious players MORTGAGE INTRODUCER FEBRUARY 2012 13

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