Online mortgage broker Habito has found that parents are going to extreme lengths in order to help their children make their first steps onto the property ladder.
Its national study questioned 1,000 parents around the pressures faced by both them and their adult offspring when it comes to home ownership.
On average, parents surveyed were found to have purchased their first home at the age of 26, this compares to the national average first-time buyer in the UK in 2017 being aged 32, according to the Department for Communities and Local Government. While 75% of parents hope that their adult kids will end up owning their own home, a significant number said that they see home ownership as more than a practical asset for the future, but one that would help their child feel like an adult and even improve their self-esteem (30%).
The survey found that parents had considered numerous ways of giving their offspring a much-needed savings boost. 62% of parents of those currently renting admitted they would be willing to let their kids move back home permanently, to save money. 44% would gift or lend them from their own savings with 20% saying they would lend them £10,000 or more, and others prepared to go to even greater lengths, including downsizing their own home (12%), or even delaying retirement (9%).
Daniel Hegarty, co-founder of Habito, said: “It is tough to get your first step on the property ladder, and it’s reassuring to see sympathetic parents are willing to lend a helping hand.
“While home buying has become much more expensive, comparative to earnings, it is also an overly complicated process and simply having someone with you who has bought a home who can support and guide you is always a big plus.”
One in three parents admitted to feeling worried about their child’s future because they had not been able to get onto the property ladder yet. However, two-thirds of parents felt understanding about the predicament their kids face and say they are careful not to pressure them too much into investing in a home. 56% of parents expressed sympathy that general living expenses simply don’t allow for savings. Despite recent criticisms of millennials and their spending habits in the media, just 25% of others felt that a social life was prioritised over saving to buy their own home.
All regions surveyed expressed significant levels of worry about their child’s future home ownership prospects and also agreed on lack of funds being the biggest setback for them. Every Londoner surveyed would have their children live at home rather than spend money renting. It was those in London who were also most willing to consider downsizing in order to help their children whereas those in Northern Ireland would be most likely to think about re-mortgaging their property.
Although 35% of those surveyed hadn’t raised the issue of home ownership with their children recently, 20% said they had been influenced by the news of rising interest rates and the relief for first time buyers from Stamp Duty as laid out in the Government’s Autumn Budget. They said they planned to talk to their children about home buying or to think about how they can help their children to buy their first home, with many of these conversations expected to take place this week whilst their adult children are visiting for the Christmas Holidays.
Hegarty added: “The end of the year is a time for reflection and is used to discuss big financial commitments for the next year. For many Britons, getting on the property ladder is a key investment into the future and understandably this is a concern for parents across the country.
“Currently, one in four homeowners are overpaying on their mortgage, yet remortgaging from a standard variable rate to a fixed rate mortgage can save up to £4,000 per year. By putting those savings away over a couple of years in an ISA could make for meaningful gift or loan to top-up a deposit.
“Help to Buy and Shared Ownership schemes can also lift some of the pressure off first-time buyers’ shoulders, as will the removal of Stamp Duty and using a Lifetime ISAs for savings.
“For those that can pull a deposit together, there are mortgages to be had at 95% loan-to-value, meaning just 5% deposit is needed. Using a professional broker can give you a much better chance of being successful in your application to the lender at this level, and many broking services are now online and free.”