With rental rates rising, more and more first time buyers are finding it increasingly difficult to find the spare cash every month to scrape together the significant amount needed to secure a deposit.
As property prices continue to rocket, the requirements for a deposit continue to climb as well, and as the pressure increases, up to 25% of first time buyers are turning to the ‘Bank of Mum and Dad’ for a leg up onto the first run of the property ladder.
And Mum and Dad seem to be happy to help out, the average amount that is gifted to home buyers by family and friends is a whopping £17,500 according to research from Legal & General and the Centre for Economics & Business Research. In many cases, the figures that family are handing over represents a significant portion of their household net wealth, so it is a very generous act. Across the UK, the varitation in property prices ensures that the deposit required varies widely:
BOMAD, as the transactions are now referred to, are so significant in the property market that it now ranks among the top ten lenders for property purchases in the UK, with around 305,900 people receiving help from family. However, unlike traditional lenders, in nearly 60% of cases the money is a gift, so the lucky recipients won’t be expected to pay any of the funds back. For 18.3% of cases it is a no-interest loan, whilst only 4.8% receive the money as a loan with interest repayments.
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