More than a quarter of homebuyers will receive help from family or friends to get on the property ladder this year, although the sums provided are falling.
Around 316,000 buyers will get financial assistance from the Bank of Mum and Dad this year, according a new report from L&G, equivalent to 27% of those purchasing properties, and up from 25% last year. Last year, 298,300 people received help from family or friends to purchase a home. In total, the value of Bank of Mum and Dad-supported property purchases this year is predicted to rise to £81.7 billion, up 5% compared to 2016.
The average parental contribution this year is expected to be £18,000, down 17% compared to an average of almost £22,000 last year. Total lending has fallen from a peak of £6.5bn in 2017 to £5.7bn in 2018.
Homebuyers in London, where property prices are highest, typically receive the biggest contributions from parents, with the Bank of Mum and Dad handing over an average of almost £31,000. In contrast, the average contribution in Scotland is just under £11,000. Nearly half of buyers in London (41%) receive help from family or friends to buy property, more than in any other region.
It's not just younger homeowners who are receiving financial support to get on the property ladder. Although under 35s are most likely to get help from the Bank of Mum and Dad to buy a home, with nearly three in five in this age group receiving money, one in five homebuyers aged between 45 and 55 are relying on financial support from their parents.
Ways for parents to provide supportGiving a lump sum is one way parents can help their children buy a property, but there are other options available to those who don't want to hand over their savings.
For example, with a Barclays Family Springboard mortgage, homebuyers can take out a mortgage without putting down a deposit, provided their parents agree to keep 10% of the property purchase price in a savings account for three years. The money will be returned to them at this point with interest, provided all mortgage payments have been made on time.
Nationwide Building Society's Family Deposit Mortgage, meanwhile, doesn't require parents to put down any savings, instead allowing them to borrow against some of the equity in their home, so they can then gift this to the homebuyer as a deposit.
Other lenders, including Family Building Society, Post Office and Aldermore, also offer mortgages which enable family members to provide first-time buyers with financial support, so it's a good idea to seek advice on the best option for you based on your individual circumstances.