While getting a loan or a gift from the Bank of Mum and Dad and using savings are by far the most common ways to fund the upfront payment on a mortgage, many are relying on the sale of expensive belongings to boost their deposit.
Indeed 63% of people looking at buying their first home, who were questioned by The Nottingham Building Society, said they planned to sell one or more valuable items. What’s more, 14% of them expected to raise more than half the required funds by doing this.
Other common methods first-time buyers use to pay for the deposit included accepting loans from friends or wider family members such as grandparents.
Nearly all those questioned would use their cash savings and 60% said they would use their stock market investments for the deposit.
Bonus cash available
However, The Nottingham was concerned many first-time buyers were missing out on bonuses available from Government-backed schemes such as Help to Buy ISAs and Lifetime ISAs.
It said 40% of those questioned had no intention of using a Lifetime ISA (LISA), which is a tax-free savings account which allows savers to invest up to £4,000 and benefits from a 25% Government bonus .
And it said approximately a quarter of savers were missing out by not planning to take advantage of the Help to Buy ISA, which allows savers to deposit a lump sum of up to £1,200 in the first month and £200 from then on up to a maximum of £12,000. Savers receive a Government bonus of up to 25%.
Tina Hayton-Banks, director of member services for The Nottingham, said its research demonstrated how first-time buyers were exploring every available route to get on the housing ladder.
She added: “It’s a shame there’s still a relatively low awareness of products that can help them get there faster, such as Lifetime ISA, but it’s an account we’re proud to be offering to support first-time buyers and expect to see its popularity grow and grow.”
The Nottingham is currently one of only three providers which offers a cash LISA. It currently offers 1% interest to cash LISA savers.
| Source of funds | Percentage of people planning to buy their first home who will use this | Percentage of would-be first-time buyers who expect to get 50% or more of their deposit from this source |
| Sell valuable assets | 63% | 14% |
| Parents | 81% | 22% |
| Parents of their partners | 68% | 10% |
| Grandparents | 49% | 11% |
| Inheritance | 62% | 21% |
| Cash savings | 90% | 50% |
| Investments | 60% | 19% |
(Source: The Nottingham Building Society)
