Family funding drives mortgage deposits
With the Bank of Mum and Dad, and even Gran and Grandad, firmly back in the spotlight, new research from Clydesdale and Yorkshire Banks has revealed that almost half of first time buyers in the UK turn to their family for help with raising the deposit to get a first foot on the property ladder.
According to the Banks' findings, 49% of first time buyers get financial assistance from their family when buying their first property with 11% using an inheritance.
When it comes to how much financial assistance they had, more than a third (35%), said they received up to 10% of their property's sale price as a deposit, and one in three (30%) received the equivalent of a 20% deposit.
"Getting a first footing on the property ladder is a big step, and huge financial commitment," said Andrew Pearce, Retail Director at Clydesdale and Yorkshire Banks. "So it's no surprise that many have to turn to family or other means to find the deposit to secure a mortgage."
The majority (58%) of first time buyers in Wales received up to the value of a 10% deposit, followed by Scotland and those in the East (48% each). Whereas those in the North East (81%), Scotland (79%) and Yorkshire (79%) are among the most likely to get help with up to 20% of the value of their properties.
"Knowing that the majority of people need some help with their deposit, it's understandable why they give themselves time to save before starting to look for their first home," continued Andrew Pearce.
"More than a quarter (27%) of the first time buyers we questioned said they expected it to take them between one and two years to save for their first home, followed by 22% thinking it would take less time at between six and 12 months. However, almost a fifth (18%), weren't as optimistic about how long it would take them to save a deposit - thinking it would be between four and five years."
Those in the North West were the most optimistic of the UK regions about how fast they could save their deposit, with more than a third (34%) saying they thought it would take between 6 months and a year. Whereas, perhaps understandably, one in ten (10%) first time buyers in London thought it would take them more than five years.
"Buying your first home mixes excitement with nerves, but knowing that there are products out there specifically tailored to the needs of a first time buyer can go some way to alleviating the apprehension," concluded Andrew Pearce.
The Banks currently offer a three year rate fixed at 6.29% for buyers with a 5% deposit and a three year fixed rate at 5.69% for buyers with a 10% deposit, both with no arrangement fees. Clydesdale and Yorkshire Banks have a range of competitive mortgages for first time buyers and remortgagers. For more information, visit cbonline.co.uk or ybonline.co.uk.