Homeowners need help from family to get off the first rung of the ladder
Over a third (35%) of homeowners admit that, without financial support from family and friends, they wouldn’t be able to make their next move, according to Lloyds Bank.
Nearly the same proportion of these so-called ‘Second Steppers’ require an average of £21,231 in hard cash from the ‘Bank of Mum and Dad’ and other family members.
While parents help 17% of homeowners move up a rung of the property ladder, grandparents (9%) and friends (6%) also pitch in with financial support.
The research revealed that half (50%) also required help with the deposit on their first property. The average amount borrowed from family and friends the first time around reached £21,512, almost the same as they are hoping to borrow again (£21,231) from parents or grandparents.
Mind the gap
The price difference between a typical first-time buyer home and a Second Stepper’s ideal home – typically a detached property – is £126,000. However, the average equity level of £105,068 from the sale of their first home means they typically need only add an extra £21,005 to their existing mortgage.
Andy Mason, mortgage director at Lloyds Bank, said: “Parental support continues to play a vital role in helping young people to get on the property ladder. However, it is clear that despite improved conditions for this part of the housing market, Second Steppers will still rely on the ‘Bank of Mum and Dad’, with hard-pressed parents being once again called on for financial help. Without this extra financial support, Second Steppers believe that they wouldn’t be able to make the next move on the property ladder for some time.
“However, it is encouraging to see many Second Steppers planning ahead by overpaying their mortgage and making bigger contributions into savings accounts to prepare for when the perfect home becomes available.”