New research has highlighted the difficulties experienced by some first time buyers as they try to take that all-important first step on the housing ladder.
Family Members Play an Important Role
A survey by Which? Mortgage Advisers found that 69% of respondents had taken more than two years to save a home deposit for their first home and a quarter (23%) had to save for 5-10 years. The average size of a mortgage for a first time buyer (FTB) was apparently 68% loan-to-value.
The survey also revealed the central role played by relatives in helping new buyers into the market. Almost three in ten (29%) reported receiving financial help from their parents and a further 8% were given financial help by other family members.
Bank of Gran and Grandad
The “Bank of Gran and Grandad” also appears to have a big part to play in helping first time buyers secure their first home.
New research from Santander Mortgages found that around one in ten (8%) FTBs now rely on grandparents for their deposit, a four-fold increase compared to those who bought their home five years ago (2%).
There has apparently been a significant shift over the past five years towards turning to family for help in order to get a foot on the property ladder. Of those currently looking to buy, 32% will use a family loan to help with the deposit, a sharp increase from the 13% of current homeowners who asked for financial help from their families.
Santander found that FTBs estimate their deposit will be, on average, 32% of their salary. However, as many as one in five (19%) expect to pay more than half of their annual income on their deposit.
These deposits are much higher than they were for current homeowners when they bought their first home. On average, they had to find a deposit of around 20% of their yearly income, with only 5% spending more than half of their salary on a deposit.
Despite the extra help from family members, FTBs saving for a deposit expect to do so for an average of five years, which is one year longer than those who bought their first property five years ago.
First Time Buyers Remain Optimistic
However, despite these difficulties, it’s good to hear that FTBs appear optimistic about the property market, with ten million UK adults planning to buy their first home in the next five years. In fact, 45% of those looking to buy are more positive now than they were a year ago, compared to just 20% whose confidence had declined.
“Despite having to use alternative income streams over and above their salary – such as relying on the Bank of Gran and Grandad - today’s first time buyers are demonstrating resilience and determination to achieve their home ownership goals,” commented Miguel Sard, Managing Director of Mortgages, Santander UK. “The purchase of a first property still remains high on the priority list for many people across the UK and it’s encouraging to see so many first time buyers feeling positive about the year ahead.”
Contact Us
If you intend to buy property in Scotland, whether you are a first time buyer or an existing home owner, then contact our specialist property and conveyancing lawyers today.