First Time House Buyers – Bank of Mum & Dad Disappearing?
Children have often relied on the bank of Mum & Dad to get them on the property ladder. Why is this opportunity now much harder? Continue reading to find out.
First Time Property Buyers Advice – Things May Have Just Got a Lot Harder
Getting on the property ladder has progressively become harder and harder over the last few decades. House prices rising exponentially has made it incredibly difficult for lower earner first-time buyers to manage to get a deposit together.
The amounts required in many instances would require many years of savings and move these people well into their thirties before they can buy their first property.
This is part of the reason why renting has become so common but this in itself creates the issue of higher rents having to be paid in place of possible house purchase deposit savings. A vicious circle.
Now things may have just become even harder to facilitate the youth of today being able to take that first step on the property ladder.
Britain’s second-biggest property mortgage lender, the Nationwide Building Society are tightening their criteria of affordability assessment considerably and will be taking a look at the source of deposit savings from first-time buyers.
Loans or gifts from parents will not count as a part of the deposit we are told.
Why Restrict First Time Buyers?
Buyers seeking lower deposit mortgages will now need to prove that at least 75% of their deposits has come from their savings. This is to help with affordability assessments when granting mortgages.
It may also be at odds with many parents who are as keen as their ageing offspring to move into their first property and vacate the nest.
The Covid-19 effect on the economy Is still uncertain long term, with many economists and forecasters giving it their best shot.
Lenders are responding though by severely restricting the mortgage products available to lower deposit buyers.
Last year there were over 100 mortgage products available to buyers with 5% deposits and over 300 mortgage products available for first-time buyers with a 10% deposit.
These numbers have already shrunk dramatically in light of financial uncertainty ahead.
With the average house price in London being currently £470,000, first-time buyers are looking for an eye-watering £70,000 deposit, with a maximum contribution of just £17,000 from Mum & Dad.