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84% of first-time buyers rely on help from parents

Yet young people support tighter mortgage lending

First time buyers agreeing mortgage

First-time buyers should consider the total cost of any mortgage they are offered before signing on the dotted line

An overwhelming majority of first-time buyers rely on financial support from their parents, according to a study by Clydesdale and Yorkshire banks.

84% of people putting their first foot on the property ladder have to call upon the ‘bank of mum and dad’ for help, according to Clydesdale and Yorkshire – a figure that has more than doubled since 2005 when just 38% of first-time buyers needed money from their parents.

First-time buyers are also likely to need the financial support of a friend or partner when buying a property. 47% of homes purchased by first-time buyers in 2011 have been bought with joint incomes, the banks say.

Steve Reid, retail director for Clydesdale Bank, commented: ‘It is becoming increasingly commonplace for first-time buyers to require financial help from their parents when buying their first home.’

If you need financial help from your parents, or if you’re looking to help your son or daughter get onto the property ladder, read our First-time buyer help from parents advice guide.

First-time buyer mortgages

Clydesdale and Yorkshire banks are among a handful of lenders who still offer 95% mortgages for first-time buyers – but anyone taking up this offer will pay a hefty initial rate of 6.99% for a three-year fixed-rate deal.

Cheaper first-time buyer mortgages, typically 85% and 90% loan-to-value deals, are currently available from banks and building societies including Norwich & Peterborough BS, Hinckley and Rugby BS and Woolwich – but these are also significantly more expensive than the most competitive mortgages that are available to borrowers with big deposits.

You can compare the different mortgage deals that might suit you by visiting the Which? mortgage finder. If you’re looking to find out how much you could borrow, or what level of repayments you can afford, you should also take a look at our mortgage calculator tools.

First-time buyers in favour of ‘restricted’ mortgages

In spite of the difficulty first-time buyers currently face when trying to buy their own properties, a report from the housing and homelessness charity Shelter indicates they are not in favour of ‘looser’ mortgage lending.

A YouGov poll conducted on behalf of Shelter revealed that 75% of first-time buyers believe banks must lend responsibly, despite the fact that this will stop some of them from getting a mortgage. Meanwhile, 79% of the people polled believe that the banks lent irresponsibly before the credit crunch.

Matt Griffith, from first-time buyer group Priced Out, commented: ‘First-time buyers know that getting on the housing ladder is hard work, and we are prepared to work and save to get there. What we don’t need is a housing market that behaves like a casino. We just want to buy a home to live in, not a life of risky debt.’

Which? property and mortgage expert Cathy Neal says: ‘For the time being, first-time buyers will have to save hard if they want to buy a property without help from family members – so first and foremost it’s important to ensure the money you put by is earning the best rate of interest possible. Visit the Which? savings booster to see how your account is performing in comparison with the best savings deals on the market.

‘Once you have built up a deposit, think carefully about how much you can afford to borrow and be sure to compare the total cost of any mortgage deal you’re considering. The Which? mortgage finder will help you do this, as it takes into account the fees and charges you may have to pay – not just rate alone.’

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