First timers in need of parental help
Nearly two thirds of first time buyers needed financial help from their parents when they tried to get on the property ladder.
High street lender, HSBC, found that 64 per cent of first time buyers in 2012 only managed to raise the deposit to buy their own place after receiving some degree of financial help from their parents.
First time buyers now face a significantly more difficult time in buying their first property and even moving up the ladder as HSBC’s further analysis demonstrates:
|First time buyers 1983/4||First time buyers 2007||First time buyers 2014|
|Age when bought first property||27||29||29|
|Loan to value||94%||90%||80%|
|Deposit as percentage of borrowers annual income||12%||35%||82%|
|Age when bought second property||31||35||36.5|
|Value of second property||£34,883||£173,333||?|
|Age mortgage free||56||60||61.5|
Whilst according to these figures most first time buyers in 2014 will be mortgage free by their retirement, applying the same timescales to a 35-year-old first time buyer shows a different outcome. A 35 year old would most likely not finish paying their mortgage until they were 67.5 and this forecast doe not consider the impact of remortgaging.
Richard Espley, Head of Equity Release, comments:
“While many parents of wannabe first time buyers are finding themselves approaching a mortgage free existence their children are still struggling to even have one accepted.
“Even with schemes such as Help to Buy it remains incredibly difficult to buy your own place and, in particular, secure a mortgage with a more competitive rate as these require a much more sizeable deposit.
“This is where the bank of Mum and Dad is coming into force – with their own finances in order they are able to offer some much needed assistance to their loved ones, many of whom using equity release to do just that.”
Equity release allows a homeowner to unlock some of the value of their property whilst retaining the right to live there.
Content correct at time of publication