Home birds could help pay off their parents' mortgage earlier

Using adult children's board money to overpay just £160 each month, could save parents over £10,000 in 5 years on their mortgage.

With the UK's average house price remaining relatively high at £164,773 and mortgage lenders requiring higher loan to values than before the credit crunch, parents are finding that their adult offspring are staying in the family nest for longer whilst they gather the higher deposit required.

These young adults, often in full-time employment, usually pay something towards household bills, whilst saving the hundreds of pounds that would normally be spent on rent or mortgage payments each month as a deposit for their own place.  first direct has identified that even a small monthly board payment could drastically reduce the parents' mortgage if used to make overpayments, whilst leaving the child to comfortably save for their future.

Even in this difficult climate it's unlikely that young adults will stay with their parents for the full term of their mortgage, however first direct's offset mortgage is the most flexible on the market and allows homeowners to make unlimited overpayments of any amount and frequency.  The table below illustrates how parents could really make a dent in their borrowing if they use their offspring's board to make monthly overpayments of £160 for either three or five years.

If parents were able to go on making overpayments of £160 every month, even after their children have fled the nest, they could reduce the total interest cost of their mortgage by almost £20,000 and reduce the term of their mortgage by a massive 5 years.

Richard Tolchard, Senior Mortgage Product Manager at first direct commented: "first direct's offset mortgage is the perfect mortgage facility to help parents whilst they're supporting their offspring.  You never know, in these trying times, we could see young adults being asked by their parents to stay home for longer!"