Over half of first time buyers are reliant upon family money to raise the deposit on a home of their own, according to new research from Nationwide Mortgages.
31% said that they would be calling on the Bank of Mum and Dad, while 8% were reliant on other relatives such as grandparents, according to the research, which asked would-be and recent first time buyers about their home buying plans.
Another 15% said that funds from an inheritance would be used for a deposit on a property.
While 63% said they were active savers into savings accounts, with 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, Nationwide said.
Those questioned were prepared to make sacrifices to buy their own home. When asked what they would give up in order to buy a home, more than half said they would give up nights out (55%) and restaurant meals (51%), although they were least likely to give up extra TV services and entertainment (28%).
However, 7% said they’d even consider giving up a partner or spouse if it meant they could get a foot on the housing ladder. This rose to 11% of the 45-54 age group who would forego a relationship if it meant they could buy a home.
Raising a deposit represents the biggest hurdle for first time buyers. Those surveyed identified their biggest home-buying challenge as being able to pull together enough for a deposit on a home (30%), with the price of the house (21%) and cost of the mortgage (14%) some way behind.
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.
“Our Family Deposit Mortgage range has been launched in recognition of customer demand for a flexible and accessible way to use the wealth tied up in people’s homes to help another family member. This Nationwide range will enable families to give mutual support to each other and provide new options for home ownership.”
72% of those surveyed described themselves as savers. When it came to savings aims, the number one ambition was identified as building up enough for a deposit on a house (55%), followed by saving for a rainy day or a nest egg (40%) and saving up for holidays (38%).
The majority were buying with a partner (57%), but a quarter were going it alone, a figure that rises to a third in Wales and 30% in Scotland. Buying with a friend was the preferred option for 5%, although in London, with average first time buyer property prices of £410,000, this rose to 10%.
Women were more likely to want to buy a first home with a spouse or partner (62% women against 50% men). They were also more likely to want to live close to family than men (40% versus 33%).