As if first-time buyers don’t have enough to contend with, it seems there are now issues accessing cash from the Bank of Mom and Dad.
The high cost of living is impacting parents’ ability to help fund their children’s deposits, destroying the homebuying plans of three in five first-time buyers, according to new research from Aldermore.
The survey among 2,000 potential starters showed that many parents had to scale back support or eliminate it altogether.
Jon Cooper, mortgage director at Aldermore, said: “The Bank of Mum and Dad has become a staple when buying homes in Britain.
“It has long been common for parents to help their children save cash, but they are starting to feel the pressure when it comes to this support.”
Aldermore’s analysis found that one in five potential first-time buyers expected their loved ones to pay around half of their total amount deposit, that’s around £24,790.
Seeing this support diminish could lead to potential delays for those reliant on help to get on the ladder, the mortgage lender has warned.
How do parents find the money for starters?
Aldermore said the most common way families helped raise a down payment was by donating savings.
But many parents also made great sacrifices to help. 16% even sold a second home, 15% reduced their main asset, 17% took lump sums from their pensions and 9% remortgaged their property.
However, almost one in ten (8%) potential starters did not know how their family members financed the money to help them bridge the gap.
Parents also took extra steps to help their children save for their contributions. One in six (18%) potential first-time buyers lived with their parents for free in the run-up to purchasing their first home.
Cooper added: “While gift giving to children is admirable, it is important that families do not overextend themselves or jeopardize their own finances in providing support to their children.
“I would advise any buyer to seek the expertise of an estate agent, who can help navigate the more delicate and complex aspects of getting onto the property ladder.”