The Bank of Mum and Dad is very much prevalent, with recent research showing that UK parents will help 316,000 young adults purchase their first home in 2018.
This makes up a quarter of all new home purchases, according to advice service First Mortgage, which assessed Bank of Mum and Dad lending figures and predicts lending will rise further in 2018/19.
The figures highlight the perception that buying a home is unattainable for many first-time buyers without parental help. They also suggest that parents may struggle to repay their own mortgages, especially if they are interest-only products.
With some banks now offering ‘helping hand’ products where parents are jointly liable for their child’s mortgage, this trend could become a permanent part of the mortgage lending landscape.
Offering a range of assistance options that can help first-time buyers understand and access the right mortgage options, First Mortgage aims to lessen the likelihood of parents taking on the burden of an additional mortgage.
“We found these figures quite alarming,” Ian McGrail, managing director of First Mortgage, said. “It really highlights just how much help first-time buyers need to access the housing market, but it also shows that many new potential homeowners aren’t fully aware of their mortgage options.”
He said that it’s vital for young buyers to consider all of their options when buying their first home and speaking to an independent mortgage broker can open up all kinds of possibilities they may not be aware of.
“This is why we dedicate so much time and effort at First Mortgage toward surveying all the mortgage products out there, with a special emphasis on first-time buying options,” he added.
“Informed, experienced advice can make all the difference in the world when it comes to finding the right, affordable mortgage.”