About one third of homebuyers who are moving up the housing ladder from their first property need financial support from their parents, a new research revealed.
A total of 32% are in need of financial support from the Bank of Mum and Dad at an average value of £21,231, a new research report by Lloyds Bank revealed.
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In addition to this, second steppers are also looking at grandparents and even friends in order to gain the financial support they need.
Furthermore, the data from the study revealed that 35% of participants can’t afford to move out without help and 23% have decided to postpone having a family until they own their home.
The study identified the price gap between a typical property for a first-time buyer and a second stepper’s dream home, usually a detached property, at £126,000. Homeowners can reduce this gap by an average of £105,068 through the average equity level from the sale of their first home, so all they need is an additional £21,005 to succeed in moving up on the ladder.
The majority, 61%, say they plan on using the equity from their current property to secure a deposit for their new home while another 41% say they would have to dip into savings.
Out of those who say they’re think of turning to other family members to support are 26% say they are looking to borrow more than £20,000.
The research also showed that 50% needed help for their deposit on their first home. Therefore, 41% have been overpaying their mortgage so they can increase equity and 34% have increased the amount of money they’re saving every month.
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“Parental support continues to play a vital role in helping young people to get on the property ladder. However, it is clear that despite improved conditions for this part of the housing market, second steppers will still rely on the bank of Mum and Dad,” said Andy Mason, mortgage director at Lloyds Bank.
And finally, for 32% of second steppers the biggest issue to moving up on the ladder was not being able to find the right property, 26% say it was due to a lack in affordability, 24% named the cost of stamp duty tax as the main reason and 22% blamed potential changes to interest rates.
