More than a quarter of grandparents (26%) expect to help out financially with a large life event of a grandchild, according to Hodge – an independently owned group of financial services businesses.

Hodge has quizzed 2,000 people aged between 60 and 80 to find out how much time and money they spend on their grandchildren.

The research revealed that, of those who would want to help financially with a life event, 44% would be happy to contribute to a deposit for their grandchild’s first home.

“Whether it is the spiralling costs of a degree, or getting a foot on the housing ladder, young people face significant financial challenges. Paradoxically, the amount of money the government is receiving from inheritance tax has rocketed in recent years, mainly due to rising house prices.”

Matt Burton, managing director of mortgages at Hodge, said: “These findings come as no great surprise to us, we see many of our customers taking out later life mortgage products to help family members, as well as themselves, live better lives. For example, our own customer data shows that when people take out a Retirement Interest Only (RIO) mortgage, 16% are doing so to give their family a gift.”

Gifts during their lifetime

Jason Hollands, managing director at Bestinvest says: “Whether it is the spiralling costs of a degree, or getting a foot on the housing ladder, young people face significant financial challenges. Paradoxically, the amount of money the government is receiving from inheritance tax has rocketed in recent years, mainly due to rising house prices.

“Yet inheritance tax is fundamentally a voluntary tax, as ultimately parents or grandparents can gift their wealth away during their lives. Providing the gift or lives seven years after the gifts are made, these gifts will not form part of their estates for inheritance tax purposes.

“So, rather than thinking solely about leaving a legacy in a will, a better strategy might be to help your grandchildren out financially now. That could involve funding a Junior ISA or a pension (you can even contribute a gross amount of up to £3,600 a year into a pension for a child), or help fund a deposit on a property purchase. It is however really important to make sure that your own financial position is going to be secure before giving large sums of money away and this is where a good financial planner can help by developing a cash flow model of your potential future income and outgoings.”