Property Corner
Property Corner
The Bank of Mum and Dad
It is hard to get on the property ladder these days if you are a first time buyer . House price rises over recent years have put buying a home out of reach for many young folks . Their only option seems to be to rent , or carry on living at home .
The average house price in my hometown of Beaconsfield is over 1 million pounds . In London , it is nearly £ 700,000 . A starter home may not cost that much . At the time of writing though , the most affordable one bedroom apartment I could find being marketed locally was being advertised at £ 285,000 . Still , not exactly cheap .
First time buyers do have one thing going for them , rates are low , the lowest that they have ever been . This means that if you are able to get a mortgage , the monthly payments are relatively affordable . The thing that most first time buyers are lacking is capital , a deposit to put down .
The amount of deposit is important too . If you only have a 5 % deposit you are likely to be paying at least twice the amount of interest as someone with 15 %.
Over the last couple of years I have noticed that in most cases when applying for mortgages for first time buyers they are getting help from one , or both , of two sources . The Government and the Bank of Mum and Dad .
The Government has a variety of ‘ Help to Buy ’ schemes . For newly built and existing homes they can provide a guarantee to the lenders that keeps the cost of a 95 % mortgage down . This is available up to a purchase price of £ 600,000 . They also provide a scheme for some newly built homes where you can purchase a share of the property , with the government purchasing the rest .
The bank of Mum and Dad can help by providing enough capital for a decent deposit by means of a gift , loan or secured bank account . This means that the cost of lending from the bank is kept down , which makes the monthly payments a lot more affordable . Of course not every parent has large cash sums available but if they are homeowners they are likely to have equity in their home , which can often be accessed for the benefit of the kids .
So if you are struggling to buy a first home , and need some help , my suggestion would be to see a good mortgage broker and be very , very nice to your parents .
Justin Cook
Chiltern Mortgage Advisors Kings Head House , 15 London End , Beaconsfield , Buckinghamshire , HP9 2HN
Tel : 01494 702105 Mob : 07717 177 250 justin . cook @ chilternmortgages . co . uk
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