Bank of Mum and Dad unaware of how to help first-time buyers
Parents of 18 to 35 year olds are not willing to take financial advice to ascertain how best to support their children’s home purchase and 38% of parents surveyed said they were unaware of any of the major four mortgage products designed to help their children take their first step into homeownership research from the UK’s largest first-time buyer lender, the Halifax, reveals.
Often regarded as both a source of wisdom and funds, the Bank of Mum and Dad has helped many homebuyers secure their first property, nearly a third (32%) of parents questioned said that they are both willing and able to financially support their children’s purchase.
However, there could be a disparity between those parents who believe they are in a position to help their children and those who think they aren’t (61%).
The housing and mortgage market is a different animal for today‘s house buying generation and as such many parents could be under the misconception that the only way to help their child’s purchase is to stump up the cash for a deposit, which for many remains unaffordable. By swotting up and taking advice parents may find that they can provide a step up onto the ladder afterall.
Innovations in the mortgage market over recent years have meant that there are now a number of products designed with first time buyers in mind, yet parents’ awareness levels of these products remains limited. Only around one in five parents (21%) have heard of guarantor mortgages, and just over a quarter understood that a mortgage could have multiple applicants such as friends and family to spread the monthly costs.
Stephen Noakes, Halifax’s commercial director for mortgages commented: “The bank of mum and dad is an important crutch for many first-time buyers, yet our research demonstrates that parents aren’t as savvy as they could be when it comes to deciding how best to help.
“Times have changed; traditionally first-time buyers turned to their parents for a hand-out but for many giving a deposit or paying off debts is not financially viable. Whilst it’s important that first-time buyers understand everything that is involved in buying a home, for many parents getting a better understanding of the state of the market and the range of products available today may make a difference to homebuyers and parents alike.”