Bank of Mum & Dad funding quarter of home deposits
Ask any ‘millennial’ today about their thoughts on owning their own home, and you’ll most likely be greeted with a sigh or a defeatist look. Partly due to the ever growing property prices but also to the difficulties they face in securing the necessary deposit for a mortgage, many are left worrying if they’ll be able to afford their own home as prices rocket.
And for those who can afford to buy their own home in these tough conditions, many are not just turning to high street banks, but also the bank of Mum & Dad.
New research published by Legal & General has found that 25% of new mortgages will be funded by parents this year, with Mum and Dad set to lend a staggering £5 billion to help their children onto the property ladder. (Source)
The research has estimated that parents will foot the bill for over 300,000 mortgages, and of the homes purchased, the collective value will be worth £77 billion – which would make for a top 10 UK lender in UK (if Mums and Dads decided to join forces and become an actual institution). And so, with the average contribution being 7% of the purchase price, this equates to an average parental contribution of £17,500.
Many fear they’ll never be a home owner
A worrying poll from The Observer newspaper has revealed that 4/10 young people fear they will now never own their own home. Of those who think they can perhaps one day afford to, 26% reckon it will take them at least five years to save up the necessary capital to buy their first home.
For those who will not have the benefit of parents who are in a position to be able to afford to fund the necessary contribution to aid buying their first home, new mortgage products for 100% mortgage are becoming more widely available. See more on 100% mortgages here.
Before you go, make sure you read our recent blog post on locations where buying still beats renting (big hint: Glasgow is amongst those locations).
At Clyde Property, we have a wide range of homes in our books for all budgets – big or small. Just search through our current listings, subscribe to our newsletter or talk to your local Clyde Property branch to help you find your next dream home!
