Aldermore’s First Time Buyer Index – which surveyed 2,000 prospective first-time buyers – found that, due to high living costs, parents are being forced to withdraw financial support that they had intended to give to their children to help them buy a home.
This is impacting three in five (59%) first-time buyers.
The survey also revealed that almost one in five (19%) first-time buyers expect their loved ones to pay around half of their overall deposit (roughly £24,790). If this amount decreases, prospective first-time buyers may have to wait longer to achieve their goal of homeownership.
The most common way families help with deposits is gifting cash, with 57% of respondents citing this method.
However, the survey also found that 16% of parents sell a second home to help out, while 15% downsize their main home, 9% remortgage their home and 17% withdraw lump sums from their pensions.
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Additionally, 18% of hopeful first-time buyers live rent-free with their parents in the run-up to homeownership.
‘It’s important that families don’t overextend themselves’
Some 8% of prospective first-time buyers are unaware of how their family members are sourcing the financial support that will help them out.
Jon Cooper, director of mortgages at Aldermore, said: “The Bank of Mum and Dad has become a fixture of home buying in the UK. Dipping into cash savings has long been commonplace for parents helping their children, but they are beginning to feel the pinch when it comes to this support.
“While gifting to children is admirable, it’s important that families don’t overextend themselves or compromise their own finances in providing support to their children. I’d advise any buyer to seek the expertise of a broker, who can help navigate the more delicate and complex aspects of getting on the property ladder.”
Alongside the huge lump sums that are often required for deposits, first-time buyers have to contend with rising mortgage rates.
