According to a recent report issued by Lloyds Bank, first-time buyers aren’t the only ones relying on the Bank of Mum and Dad to get them onto the property ladder. Second steppers are turning to their parents for financial assistance as well.
The Second Steppers report by Lloyds found that close to one-fifth of homeowners trying to advance up the property ladder are turning to family and friends for necessary funding. Parents who have been financially supporting their children since the recession are now having to assist their adult offspring in buying or renting a home.
First-time movers usually need to source an extra £125,694 to make up for the discrepancy between the sale price of their present home and the price of the property (usually a detached home) that they would like to move into. The gap goes down to £17,370 if they opt for a semi-detached home instead.
While three-quarters raise the necessary deposit from equity in their current home and over half will dip into their savings, around 14% said that they would likely turn to family members for assistance. The typical loan request is for £22,480, which is up from last year’s average of £21,080. In 2013 second-steppers were borrowing around £21,273.
Over half of first-time movers said they would not be able to proceed up the property ladder without this financial help.
Andrew Mason, mortgages director at Lloyds Bank, said that for decades, support from parents has been playing a key role in helping young people get on the property ladder. Now more second steppers are continuing to need help from the Bank of Mum and Dad to acquire their next home.
The research found that nearly half had also needed help with the deposit on their first home. The size of the average loan received from friends and family was around £24,000, which is slightly more than they are attempting to borrow again from parents or grandparents to purchase another property.
The report revealed that the size of the required deposit is still regarded as the greatest obstacle to moving home,
Of those people who are contemplating asking for financial assistance, four in 10 say that their parents have had to help them step into and move up the ladder, although this has fallen from the 70% reported in 2013.