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First-time buyers can’t rely on Bank of Mum & Dad

First-time buyers can’t rely on Bank of Mum & Dad

Category: Mortgages

Updated: 28/10/2013
First Published: 28/10/2013

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The Bank of Mum & Dad used to be where prospective homeowners could go to find help with a mortgage deposit, but it seems that the Bank is facing difficulties – around 26% of UK parents can no longer afford to give their children any financial assistance, leaving many first-time buyers struggling to get a foot on the ladder.

The research, conducted by Babies.co.uk and TwoMenandaTruck.co.uk, found that although most parents would love to help their children buy their first home a large amount simply cannot afford to, and this is despite recent Government initiatives (such as Help to Buy) meaning mortgage deposit requirements are relatively low.

First-time buyers can now get a mortgage with just a 5% deposit, meaning a home of £100,000 could be bought with just £5,000 being paid upfront. But, that target is still difficult to meet for many FTBs and their parents, particularly in the wake of increased living costs and sky-high rents, and with property prices on the rise it could soon be even more difficult.

But, the research does deliver some good news. For parents that can afford to offer help only 3% would choose not to whilst the majority (18%) would lend between £5,000 and £10,000, and a particularly affluent 12% would be willing to lend their children a whopping £100,000 or more.

For those that can scrape together a deposit it's a great time to take the plunge, with a lot of young buyers taking advantage of low interest rates and reduced deposit requirements. Malcolm York, of TwoMenandaTruck.co.uk, has this advice for would-be homeowners: "We would encourage buyers to plan ahead to ensure that they will be able to afford the repayments when rates eventually rise."

What Next?

Compare the best mortgage deals and take advantage of low rates

Find out more about Help to Buy: Mortgage Guarantee and Equity Loans

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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