Compared with a decade ago, today’s first time buyers are older, more likely to buy with a partner and more likely to have dependent children. This highlights how it is becoming increasingly hard for younger borrowers to get on the property ladder. But, lenders are always introducing new propositions to ensure there are solutions in place to help prospective homeowners buy their first property. It could be you that helps them!
Past and present
The 1980s, perhaps best known for its music and the invention of Super Mario. But it was also a time when the average house price was £22,676 and the average deposit was £3000. Fast forward to 2018 and we see a completely different picture, the average house price is £224,353 and the average deposit costing you £34,000. This shows a whopping growth of around 890% in house prices! However, wage growth hasn’t seen the same hike and so it comes as no surprise borrowers are continuously finding it harder. For many, the Bank of Mum and Dad seems like the only option. According to the Social Mobility Commission, over 30% of UK households with dependent children hold assets that could be used towards a deposit for the purchase of a home. This could lead to an increase in the number of first time buyers turning to help from their family. The Social Mobility Commission’s research suggests this could rise to nearly 40% by 2039/40. Do you hold assets that could provide the gift of a life time for your loved ones?
How can I help my loved one get on the property ladder?
Joint borrower, sole proprietor mortgages are one solution that may help. They’re aimed at bridging the gap between salaries and house prices and geared towards helping close family members get onto the property ladder or move home.
Lend a helping hand to your children’s plans of purchasing their first home! Joint borrower, sole proprietor mortgages allow you to support your family by adding your name to the mortgage, essentially increasing income and increasing the maximum loan available to them. Your name will only be on the mortgage and not the deeds so you will therefore be exempt from the 3% stamp duty surcharge for second properties.
Raising a deposit
Affordability is not the only challenge to first time buyers and joint borrower, sole proprietor mortgages may not be the best solution for everyone, so there are other options you may want to consider. If your loved ones cannot raise a deposit, you can still help. You can use your property or savings as security for their mortgage, as opposed to gifting them a deposit. Many lenders are offering these types of products.
So if you want to talk about how you can take your first steps onto the property ladder, or to discuss your options, call your adviser today.