Young people are increasingly turning to the Bank of Gran and Grandad in order to get a foot on the property ladder.
According to Santander Mortgages, the number of first-time buyers relying on their grandparents for help has increased fourfold compared to those who bought a property five years ago.
Of those currently looking to buy, 32% will use a family loan to help with the deposit, a sharp increase from the 13% of current homeowners who asked for financial help from their families.
The bank’s study revealed that first-time buyers estimate their deposit will be on average 32% their salary. However, a significant one in five (19%) expects to pay more than half of their annual income on their deposit.
In comparison, current homeowners estimated that when they bought their first home, their deposit was an average of 20% of their yearly income, with only 5% of them spending more than half of their salary on a deposit.
Despite the extra help from family members, first-time buyers saving for a deposit expect to do so for an average of five years. This is a whole year longer than those who bought their first property five years ago, who saved for an average of four years. This difference is likely due to the much higher proportion of those who say the cost of everyday living expenses eats into the amount of money that could otherwise be saved.
Despite these steep increases, first-time buyers appear optimistic about the property market, with 10 million UK adults planning to buy their first home in the next five years.
The research also shows the health of the UK economy has had little effect on those planning to buy, with 44% saying that while they are concerned, they will go ahead with their purchase regardless, and 39% claiming that economic factors will not affect their decision to buy at all.
Miguel Sard, managing director of mortgages at Santander, said: “Despite having to use alternative income streams over and above their salary – such as relying on the Bank of Gran and Grandad – today’s first time buyers are demonstrating resilience and determination to achieve their home ownership goals. The purchase of a first property still remains high on the priority list for many people across the UK and it’s encouraging to see so many first time buyers feeling positive about the year ahead.”
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