Nearly one in four potential first-time buyers are relying on help from the bank of mum and dad to fund their mortgage deposit, according to a new survey.
Of those, more than half (54%)will use their folks' cash savings to get a foot on the property ladder, retail bank Aldermore has reported.
We examine the first-time buyer market and explain your options if you're not able to rely on cash from your parents to buy a home.
Another quarter (25%) said that finding an affordable property was the greatest challenge, and others mentioned issues such as /valuation fees (2%), finding a suitable home for sale (4%), interest rates (5%) and (4%).
Damian Thompson, Aldermore's director of mortgages, claimed high house prices, not enough suitable homes and weak wage growth means 'the bank of mum and dad has increasingly become a necessity, rather than just a helping hand'.
In total, 1,500 first-time buyers were surveyed by Aldermore in November last year, and 23% said that they had need help from their parents in order to afford a mortgage deposit.
The table below shows the different ways in which those people said their parents will help:
|How will your parents/family assist you to fund your deposit?||% of those receiving help from parents|
|They will use their cash savings||54%|
|They will in their property||24%|
|They will move and downsize||19%|
|They will their property||17%|
|They will take a cash lump sum from their pensions||6%|
|They will sell their second property||4%|
Source: Aldermore First-Time Buyer Index
Not all parents are lucky enough to have cash available to help their children, but there are other options.
One could be a , where the parent acts as a guarantor on their child's loan, using either their property or savings as security. This can help boost the mortgage applicant's chances of being accepted, or give them access to better mortgage deals.
You might also want to consider a . With this kind of deal, the parent can act as a joint applicant for the mortgage - meaning that their income and financial circumstances are taken into account, as well as their child's, but only the child is named on the property deeds.
If you're saving for your first home and aren't able (or don't want) to ask your parents for help, there are other options, from schemes to larger mortgages.
These are only available on new-build homes but could help you on to the property ladder if you're struggling to buy through the normal routes.
This allows you to buy a part of the property and pay rent on the rest of the home.
Typically people buy a stake of between 25% and 75% from a housing association (a not-for-profit organisation that supplies housing) and pay rentof up to 3% on the remaining share.
Many people buy with a partner or spouse, but that's not the only option. Increasing numbers of first-time buyers are teaming up with friends in order to cut the costs of a deposit, buying fees and mortgage repayments.
Buying with another person also has the significant benefit of enabling you to take out a bigger mortgage.