Guilt-ridden borrowing from the Bank of Mum & Dad |
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Published: 04/10/2017

Many people turn to their parents for help getting on the ladder these days, yet it may not be the Holy Grail it's often touted as, with research showing that tapping into the Bank of Mum and Dad often leaves borrowers feeling guilty.

That's according to the latest First-Time Buyers Report from the Yorkshire Building Society, which reveals that 59% of 18-40 year olds are expecting to receive financial help from parents or family members to get on the property ladder – with 31% expecting help towards a deposit – yet 66% of those feel guilty about using this support to buy their first home.

Challenging times…

The majority (82%) of would-be homeowners believe it's unfair that buying a first home is harder for their generation than it was for their parents, while 59% of those expecting support are worried that accepting help would negatively impact their parents' future finances, a particular concern when you consider how much those parents could be gifting.

Indeed, the average price paid by first-time buyers in England stands at £198,325, according to figures from the Department for Communities and Local Government, which means a 10% deposit – enough to secure a 90% loan-to-value (LTV) mortgage – could set aspiring homeowners back almost £20,000. Most parents won't be covering this full amount (80% of respondents expect their parents to provide less than that), yet some will go over and above, with 14% of those aged 25-40 expecting their family to provide support totalling more than £40,000.

"In what is a tough environment for young aspiring homeowners, the 'Bank of Mum and Dad' continues to support young people's dream of buying their first home," commented Simon Broadley, Senior Manager at Yorkshire Building Society.

"But while it's clear that parents are willing, where they can, to help their children get on to the property ladder, the burden of how it could negatively impact their family's finances is leading many young adults to feel guilty about accepting help … Our survey shows how the financial and moral dilemmas facing first-time buyers remain acute regardless of whether they are fortunate enough to have parental support available."

… but optimism remains

Despite the concerns and hurdles in the way, the report goes on to reveal that would-be homeowners remain steadfastly optimistic about owning a property someday, with 65% believing that it's likely or very likely that they'll become homeowners, and 56% already saving money towards that goal.

After all, 56% believe that buying a home is an "essential" criteria of success in life, with 20% saying it's more important to them than any other life event (including getting married or having children) and 83% saying it's a sound financial investment that'd be good for their future prospects, so it's little wonder that so many are focused on reaching their goal.

"Despite the challenges facing potential first-time buyers, our results paint an optimistic picture and show how young adults in the UK still value owning their home, even going as far as to suggest it would be the most important milestone in their life," said Simon.

So why not give yourself the best possible chance of reaching that milestone? Whether you use the Bank of Mum and Dad or not, you need to make sure that your credit score is in tip top condition, otherwise you won't be able to secure that all-important first-time buyer mortgage, regardless of the financial support you receive. Head to a credit check provider to get an idea of the current state of affairs, and if your score needs to improve, read our guide on how to do just that.

You'll want to build up your own savings pot, too – even if your parents provide the deposit, you'll still need extra cash for moving and setting up your new home, so it makes sense to have a decent house fund behind you. Start looking for ways you can cut back your daily expenditure, and put everything you can into a dedicated savings account, and you may be able to reach your goal sooner than you think.

Then it's time to start comparing first-time buyer mortgages to get an idea of the offers available, and the kind of impact mortgage repayments could have on your budget. While there are plenty of 95% LTV mortgages available that require only a 5% deposit, it could be worth saving that bit more so you can go down to 90% LTV, where there's far more choice and the rates are far better. Use our mortgage calculator to see for yourself, and see if you can make your homeownership dream a reality, with or without parental help.


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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