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Over-55s cash in on property assets to get youngsters onto property ladder

Homeownership is still a key concern for many young people, and even getting onto the next rung of the housing ladder sometimes means asking for help.

According to statistics released last week from Key, the equity release provider, retirees aged 55 and over are prepared to dip into their property portfolios and assets to give their offspring a chance to enter into homeownership.

The study assessed 150 mortgage advisers, and around a fifth (19%) recorded receiving an increase in the volume of enquiries from clients aged 55 and over about selling second homes and investment property.

Parents and grandparents using savings and pensions

At present, parents and grandparents give as much as 95% of savings and 21% from their pension funds to younger people to help them to enter the housing market for the first time.

Almost one third (32%) have been asked about acting as guarantors to enable their children or grandchildren to become first-time buyers. That figure is over 28% for those who are considering remortgaging and 21% feel significant pressure to take out a new mortgage loan to allow their offspring to buy.

Data confirms that only a third of young people manage to raise a deposit through their own independent means, while mortgage brokers calculate that about half (47%) of first-time buyers receive some contribution towards their deposit by or parents or grandparents.

Second steppers are also not shy of approaching the bank of parents and grandparents as nearly a quarter (24%) of those moving to their second home are receiving financial boosts from family.

In London, UK Finance data shows the average age is 32 for a first-time buyer earning £68,000 per household.   Nationally the average age is 30 with an LTV of 85% and a loan of £145,000, meaning first-time buyers need an average deposit of around £25,600.

First-time buyers set to keep brokers busy

Levels of mortgage business are looking likely to increase as brokers anticipate a confident flurry of first-time buyer enquiries in the final quarter of 2019.

Will Hale, chief executive at Key, said: “With advisers foreseeing a surge in first-time buyer enquiries, it’s clear that the property wealth of over-55s is increasingly playing an important role in tackling the intergenerational imbalance of property ownership.

“It is really no surprise, given the fact that the average first-time buyer who wants to secure a good rate as they get onto the property ladder needs to find just over £25,000 for a deposit.”

“There is a real possibility for this generosity to have a sting in its tail, with the older generation often using their savings and pensions to help raise the deposit. It is vitally important to ensure that they make decisions which will benefit themselves and their families over the long term and important to seek specialist advice which considers all options, including equity release.”

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