First-time buyers around the country are seeking help from the 'bank of mum and dad' as high property prices lock them out of home ownership.
The good news for parents is that this help can come in many forms, from gifted deposits to joint and guarantor mortgages.
Here, we explain the challenges facing first-time buyers in 2020 and offer advice on how you can give your child a boost on to the property ladder.
The online mortgage broker claims that first-time buyers in 2020 need to 18 times more than those in the 1970s, and that the cost of a first home has increased from four times the average salary to eight times.
These affordability issues have resulted in the average first-time buyer age rising from 25 to 33 in the past 50 years.
In such a difficult market, cash-strapped buyers are increasingly relying on help from their parents and grandparents.
Research by Habito found that 40% of first-time buyers are now gifted cash by a family member, with this figure rising to 60% in London.
|Region||Percentage of buyers given a cash gift|
|Yorkshire & The Humber||28%|
Source: Habito, February 2020.
Gifting a deposit might seem like a straightforward way of helping your child, but you will need to think about any tax implications.
Even if that's unlikely to be a concern for you, holding off gifting a deposit could prove be a costly decision.
A cross-party group of MPs has proposed an overhaul the IHT system, including introducing a flat 10% tax rate on gifts of more than £30,000.
If you do decide to give your child money for a deposit, you'll need to provide a letter confirming you provided the cash and that it won't need to be paid back.
Some lenders may also require you to sign a declaration that you will have no legal interest in your child's property.
Gifting your child a deposit will allow them to take out a mortgage on the open market.
Guarantor mortgages are sometimes described as 100% mortgages, as many don't require the borrower to put down a deposit.
Instead, the parent will either lock up cash in a savings account with the lender or agree to have their property used as collateral if the child defaults.
These deals generally require either 5% or 10% of the cost of the new property to be placed into a savings account with the lender for a set number of years (three and five years are the most common periods).
How much interest is paid on savings varies from deal to deal, and some products don't pay any interest at all.
These deals allow you to keep hold of your savings rather than giving them away, but you'll be locking your cash up for a number of years, and not necessarily with a good interest rate.
Your child will also have far fewer mortgage options than on the open market.
These deals involve a lender securing a charge against the your home in case your child defaults on their mortgage.
The rules vary by lender. Some will set a 10% charge against the home, while others will set a charge of as much as 25%.
The charge is then released after a set number of years or once your child has paid back a big enough proportion of the mortgage.
You'll usually need to have a certain amount of equity in your property, but again this varies by lender.
Using your property as security can avoid the need to part with any cash, but it puts your home at risk if your child defaults on their mortgage.
Again, these deals aren't particularly common, so there'll be less opportunity to shop around compared with the open market.
Joint mortgages allow you to buy a property with your child.
This could significantly boost your child's chances of getting a mortgage as your income will be taken into account, but can be an expensive and risky.
The biggest concerns are that your name will be on the deeds of your child's home, so you'll need to pay the if you already own a property, and you'll also be jointly liable for the mortgage repayments.
Joint mortgages are a good way of boosting your child's borrowing power, but stamp duty implications make this a less-attractive option.
Joint borrower sole proprietor (JBSP) mortgages offer an innovative way of buying a property with your child but without needing to paying the stamp duty surcharge
JBSP deals take into account the financial circumstances of both you and your child when assessing affordability, but only your child will be named on the property deeds.
This mean you won't officially own any share of the property. You will, however, be named on the mortgage and will be considered jointly responsible for repayments.
JBSP mortgages are a good idea in theory, but they're not widely available.
Lenders are more likely to offer these deals to first-time buyers in industries where their salary is likely to increase significantly.
Banks will also take into account your age at the end of the mortgage term, so older parents may be ruled out.