Drawing on the Bank of Mum and Dad for financial support isn’t a new phenomenon. But with the rising cost of buying a home, many first-time buyers are faced with making a least one big withdrawal from this ‘institution’.
Help for first-time buyers: First-time home buyer guide – how to get on the property ladder for the first time
And now new research has revealed the heavy price parents are paying to help their children get a foothold on the property ladder.
The first-time buyer index from retail bank Aldermore showed that parents are prepared to sacrifice their own home comforts and their retirement funds in order to give their offspring a place they can call their own.
Almost a quarter (23 per cent) of survey respondents admitted then they will ask their parents/family members to assist them in putting together a house deposit. And when asked how their ‘lenders’ would be able to do this the results were as follows:
- They will use their cash savings — 54 per cent
- They will release equity in their property — 24 per cent
- They will move and downsize — 19 per cent
- They will remortgage their property — 17 per cent
- They will take a cash lump sum from their pensions — 6 per cent
- They will sell their second property — 4 per cent
Commenting on the findings, Damian Thompson, Director of Mortgages, Aldermore said: ‘Young people have had a stark fall in home ownership the past two decades, and with a challenging environment of high house prices, shortage of suitable homes, and weak wage growth this trend will likely not change any time soon.
‘A typical new buyer now needs 18 years to save for a deposit, a striking rise from three years in the mid-90s, meaning the need for the Bank of Mum and Dad to provide support has increasingly become a necessity, rather than just a helping hand.’
Releasing money from you home: Equity release – a guide to accessing the cash tied up in your home
Do the research findings ring true for you?