With rent at an all-time high and independence being at the forefront of every young person’s mind, buying your first home can really make you feel like you have taken a huge leap in life and achieved something. But unfortunately, it’s not always as straight forward as saving a deposit and getting a mortgage. Statistically now in 2022 first-time buyers are expected to pay around £270,000 on average for their first home.
Often people struggle to put money aside for a deposit and if they do, the minimal amount that they can spare would take them years and years to build up to an acceptable deposit for a mortgage lender. That’s why figures show that almost half of all new first-time buyers are looking for help with their deposit from their parents.
What are the figures?
Research suggests that 48% of first-time buyers expect that their parents or family will help them with purchasing their first home and over 50% of first-time buyers would happily accept help offered to them whether expected or not. Research also shows that 66% of parents with children would be willing to help their children to purchase their first home, a surprisingly large amount and an encouraging figure for prospective new buyers looking for a helping hand. But why are older generations so willing to help financially as the likelihood is, they probably didn’t receive the same help in the past.
Family finance company Tembo, who carried out the research has commented: “Money matters can be very emotional, the report shows. Many FTBs – 70% – feel jealous of older generations regarding the economic environment, and 83% of homeowners agree that the upcoming generation faces more difficulties than they did. And 41% of homeowners admit a sense of guilt over this, with the younger the homeowner the more potent the feeling.
Our latest data shows the depth of the financial challenges FTBs continue to face in getting onto the property ladder compared to the generations before them. Opinion aside, there is a distinct imbalance in wealth distribution across generations. With many expecting to pay nearly nine times their average earnings to secure a first home, the average FTB can’t afford to buy without support. But it’s clear that more accessible and innovative options are needed, solutions beyond kids moving home for years to save a deposit, or families gifting large lump sums of cash.”
What do the advisors say?
Content manager at Oportfolio Louis Mason weighs in on the subject: “This is a very difficult subject to cover in my opinion as we have two generations looking at each other and trying to understand how the other is feeling. It is clear that the ability to save money and purchase a property in the past was a lot more straight forward than now and I wholeheartedly agree that this should be taken into consideration more by lenders. With the emergence of initiatives such as the help to buy scheme for first time buyers and the shared ownership scheme, I think we are definitely moving in the right direction and if family members are willing to help out then that is great news as well! And with great advice and guidance from mortgage brokers we can kickstart the new generation home ownership.”
If you are looking to buy your first home or if you have a child who is looking to buy, please give our friendly and knowledgeable team a call on 02088771169 to talk through your options.