It is not just first-time buyers that require additional financial support from the Bank of Mum and Dad, second steppers also need a helping hand, new research shows.
According to Lloyds Bank, almost a third (32%) of second steppers think they will still rely on financial help from family and friends to move up the property ladder.
They also plan to raise the deposit required for their next move by borrowing money not just from the Bank of Mum and Dad (17%), but also grandparents (9%) or friends (6%).
Andy Mason, mortgage director at Lloyds Bank, said: “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.”
Of those who require financial help from their parents, almost half (47%) believe that their parents have had to make sacrifices in order to help them move up the property ladder.
The price difference between a typical first-time buyer home and a second stepper’s ideal home – typically a detached property – is £126,000.
However, the average equity level of £105,068 from the sale of their first home can help to reduce this gap by 83%, meaning that second steppers need only add an extra £21,005 to their existing mortgage.
In order to get the deposit for their next move, the majority of second steppers plan to use the equity from their current property (63%), while two-fifths (41%) will plunder their savings.
Those considering turning to family members to help them out (26%) are typically looking to borrow more than £20,000.
The research revealed that half (50%) also required help with the deposit on their first property.
The average loan size first time buyers received from family and friends the first time around reached £21,512, only slightly more than they are hoping to borrow again (£21,231) from parents or grandparents to take the next step on the housing ladder.
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