Recent research has indicated that 32% of people moving to their second home will require financial assistance from friends and family.
According to Lloyds Bank, almost half (47%) of this figure think that in order to help them move up the housing ladder, their parents have had to make sacrifices.
£126,000 is the usual difference between the price of a first-time buyer home and a second stepper property. Given that the average level of equity from the sale is £105,068, those moving up the housing ladder will need an additional £21,005 to complete their purchase.
In light of these figures, it’s hardly surprising that those taking their first steps onto the property ladder will also require financial help – an issue which is frequently highlighted in the media. The research indicated that 50% of first-time buyers required assistance with their deposit, with average loan received from friends and relatives reaching £21,512. This is only slightly greater than the amount they expect to borrow for their next home, an average of £21,231.
Although getting onto the property ladder is commonly seen as difficult, one in four second-steppers believe moving up the property ladder is more of a challenge. In order to increase equity size and ease the cost of moving, 41% have been overpaying on their mortgage whilst 31% have been saving more every month. Just under two-thirds (65%) also stated that since moving to their first home, they have either started saving, or continued to do so.
For the majority (32%) of those moving up the property ladder, the biggest obstacle is being unable to find the right property, whilst 26% claimed their biggest hurdle was the lack of affordable homes. Stamp duty land tax was the main problem for just under a quarter (24%) of second steppers, whereas 22% cited possible interest rate changes as a key issue when trying to move up the housing ladder.
When it came to those selling for the first time, the main challenges differed. 29% claimed that deposit size was holding back their sale, whilst 28% claimed that tighter lending criteria was the reason their sale had stalled. The same figure stated potential interest rate changes as the main obstacle.
Commenting on the research was Andy Mason. The mortgage director at Lloyds Bank highlighted the vitality of contribution from parents when moving up the housing ladder, as well as getting on it.
“Parental support continues to play a vital role in helping young people to get on the property ladder. However, it is clear that despite improved conditions for this part of the housing market, second steppers will still rely on the ‘Bank of Mum and Dad’, with hard-pressed parents being once again called on for financial help. Without this extra financial support, second steppers believe that they wouldn’t be able to make the next move on the property ladder for some time.
“However, it is encouraging to see many second steppers planning ahead by overpaying their mortgage and making bigger contributions into savings accounts to prepare for when the perfect home becomes available.”