Frantic first time buyers seek help where they can get it
Forget the so-called Bank of Mum and Dad - first time buyers desperate to get on the property ladder are now seeking financial help from an increasing number of different sources.
Grandparents, siblings, other relatives, friends as well as Help to Buy and shared ownership schemes are now also in the mix but alarmingly, many purchasers are failing to protect themselves with legal agreements, according to new research.
With the property market still on the rise, and the average first time buyer needing at least a £16,000 deposit, a new trend towards multiple parties becoming involved in funding property transactions is beginning to emerge, a law firm has discovered.
- Almost half of first time buyers expect to need help from at least three different sources - including gifts and loans from parents, grandparents and other relatives, buying with friends or siblings, Help to Buy schemes and shared ownership;
- An incredible 70 per cent expect to need at least two additional means of financing their purchase.
Disturbing lack of legal agreements
But worryingly, 33 per cent of joint buyers would not put a legal agreement in place, despite putting down uneven deposits, and 18 per cent say the reason for this is a fear of upsetting the other people involved - even though it puts them at risk of not getting their fair share if things fall apart and the property has to be sold.
Bank of Mum and Dad still supporting many purchases
According to the Centre of Economics and Business Research, 300,000 buyers were helped by a family member last year and around £77 billion worth of property purchases were underpinned by the Bank of Mum and Dad - now known as BOMAD - making it the equivalent of a top ten mortgage lender.
Around 35 per cent of first time buyers ask parents for financial assistance and parents who do help, hand over an average of £17,500. More than half of these contributions are gifts, 18 per cent are no interest loans and 5 per cent are loans with interest.
To read more about the rise in the number of parents helping their children onto the property ladder and what considerations to take into account click here