First-time buyers drive older borrower mortgage enquiries
Retired homeowners are considering options such as acting as guarantors, remortgaging or cashing in buy-to-lets (BTLs) to help their children and grandchildren get onto the property ladder, the latest research from Key has suggested.
Parents and grandparents are increasingly looking to their own property assets to help the younger members of their family onto the housing ladder, whilst continuing to use savings and pension funds.
According to the study of 150 mortgage advisers, nearly a fifth (19%) have had enquiries from older customers about BTLs and holiday homes, whilst 32% have been asked about acting as guarantors.
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 inter-generational 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.
“That said, with the older generation often using their savings and pensions to help raise the deposit, there is a real possibility for this generosity to have a sting in its tail.”
A further 28% of advisers are investigating the option of remortgaging, whilst 21% are reportedly taking out new mortgages.
Mortgage brokers estimated that nearly half (47%) of first-time buyers are partially helped with their deposit by grandparents or parents, with only a third able to so without any financial support.
Advisers also estimated that nearly a quarter (24%) of those moving to their next home are being helped in part with their finances by parents and grandparents.
Hale added: “Getting specialist advice which considers all options, including equity release, is vitally important to ensure that they make decisions which will benefit themselves and their families over the long term.”