A report published Tuesday by Vancouver-based Blue Shore Financial found that the coming generation of Canadians will be tied much closer to their parents financially than many advisors might expect.
According to the study “family-financed mortgages” are becoming a trend in Vancouver. The study of Lower Mainland B.C. families found that more than 40 percent of residents surveyed said they received assistance from their families to buy homes. But the rate rises dramatically for young families: 76 percent of these expect to help their children with a family-financed mortgage in the future.
"This survey confirmed what we are seeing: an increasing number of our clients want to assist their children with home financing," says Blue Shore Financial CEO Chris Ratliff. "This points to a need for financial planning. Both parents and children who are looking to buy a home need a strategy to achieve this goal without sacrificing their long-term financial wellness."
Blue Shore Financial is a boutique financial firm with twelve branches across the Lower Mainland and the Sea-to-Sky Corridor. The firm’s research finds family-financed mortgages are placing a growing burden on parents. Older generations say the decision to help children with finances has not affected their own personal financial plans. Younger parents say helping their children will affect their retirement savings plans.
The study found most common method of helping kids with their home is to provide them with a loan for a down payment. The most common amount according to the survey was between $100,000 and $199,000. “This survey confirmed what we are seeing: an increasing number of our clients want to assist their children with home financing,” said Ratliff.
More than half of all respondents (58%) say that if they don’t help their kids this way home-buying will be delayed.