It seems the ‘Bank of Mum and Dad’ may still be the first port of call for many first time buyers with many young people looling to their parents for help in buying their first home.
A recent report by the Halifax reveals the average deposit in the first half of 2011 is 8 per cent lower than for the same period last year. The report
also states that more towns in the UK are affordable to first time buyers than at any time since 2003. This is all good news for those aspiring first home owners considering taking that first step.
However, with the average deposit standing at over £27,000, in a large proportion of cases, parental input is required. A survey by first time buyers’ website FirstRungNow.com of more than 2,000 aspiring home owners, reveals the hard truth about getting a first time buyer mortgage together is sinking in. Of more than 2,000 respondents, over 26 per cent fully expected their parents to have to help out with the mortgage. Helen Adams, founder of the on-line news and advice centre comments:
Parents are lending or donating deposits
“With property prices still so high and first time buyer mortgages still fairly hard to come by – though a little easier than last year – parents are invariably getting involved by lending or donating a deposit. Further research by FirstRungNow.com reveals that 28 per cent of the respondents also expect their parents to help out with the deposit, by harnessing their earning power, acting as guarantor or depositing a proportion
of the property’s value into a special savings account.”
While in the past some first time buyer mortgage applicants have had their applications turned down because of poor credit ratings, 73 per cent
know that even defaulting on a phone contract can affect them almost 60 per cent know where to find their credit ratings.
With property prices currently stabilising and first time buyers feeling rather despondent about their house-buying future, lenders are keen for it to be known that they do not turn down as many applications and it may seem.
Adams advises: “Although lenders find first time buyers more costly to deal with, there is a propensity to lend to good borrowers – aspiring home owners should seek first time buyer mortgage advice on line and speak to mortgage advisors who cover the whole of the market rather than
focusing on just one lender.”
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