For many young people, the Bank of Mum and Dad has become the only route to buying their own property. Whilst mortgage rates remain low, the ever-increasing price of houses across the UK means that even before they try to borrow, first-time buyers need to save a larger deposit.
With wage growth holding a sluggish pace, research shows that under these conditions many are turning to the bank of Mum and Dad to help them achieve their financial goals.
Saving a deposit as a first-time buyer
In 2017 over a quarter of homeowners said that they received financial help to buy their property, with that number rising to 62% for under 35s, according to research by Legal and General. (source)
Parents, family and friends put up a massive £6.5 billion to help loved ones get their foot onto the property ladder – a 30% increase on the previous year.
It is not only young, first time buyers that have to rely on the generosity of family nowadays, sometimes second steppers on the property market need to cover the gap with a bit of financial help. If parents can’t afford to give away the money for the deposit, buyers can come to terms on lending the money from their parents – which can take the shape of a loan with monthly repayments or a financial agreement for returning the money over time.
Combining your efforts
Sometimes family simply won’t be able to afford to give you the money required as a cash gift or loan – but there are other financial options out there that could help you reach your goal.
From scanning the wide variety of mortgages available, some with a minimum required deposit starting at as little as 5%, to considering a family deposit mortgage that could see your parents use the equity in their own property to give you a lump sum for your deposit to considering an offset mortgages can also be used to help you pay off your debts ahead of time by setting savings against your mortgage, there are options you can potentially consider.
Whatever you think may be right for you and your family, we are best placed to help you decide. With access to the full market and expert knowledge of the full range of services, The Mortgage Hub are best placed to find the perfect solution for your financial situation.
If you’re relying on the bank of Mum and Dad for your deposit and have questions about what the best arrangement would be for you and your family, contact our friendly team to arrange a meeting today.
The Mortgage Hub is an independent mortgage advisor serving the greater Glasgow area. Whether you are planning to buy your very first home and need the right first time buyer mortgage, or are looking to re-mortgage due to a house move or to growing family – we understand your journey is so much more than a financial process, it’s a journey to achieve your dreams, improve your lifestyle and achieve your true potential.