Half of first-time buyer deposits come from family members
More than half of first-time buyers depend on members of their family to help them amass enough money for a deposit on their first home, said Nationwide.
It revealed that nearly a third of first-time buyers said they would get money from the Bank of Mum and Dad, while 8% were reliant on other relatives, such as grandparents. Another 15% said that funds from an inheritance would be used for a deposit on a property.
Lack of knowledge
The research also threw up some startling misconceptions about what can be used as a home deposit.
While two thirds (63%) said they were active savers into savings accounts, with a quarter (26%) specifically identifying the Help to Buy ISA as their savings vehicle of choice, a significant proportion thought they could use a personal loan (10%) or credit cards (5%) to fund a deposit.
This is despite the fact that unsecured borrowing for this purpose could potentially damage their chances of securing a mortgage.
Matt Smith, Nationwide’s head of product management for mortgages, said: “The research bears out what we know – that raising a deposit, particularly as a would-be first time buyer, is often the biggest barrier to owning a home, and that family support can be vital to enabling them to take those first steps.
“It’s also clear that while the majority know how important saving for a deposit on a home may be, very often it’s extremely difficult to achieve without family support. However, they should never rely on borrowing to fund their deposit, such as credit cards or personal loans.”