Rising house prices have piled the pressure on prospective buyers who are saving for a deposit and it is expected that the ‘Bank of Mum and Dad’ will be called upon for gifts and loans of £9.8bn in 2021. The £3bn value of Help to Buy loans granted in 2020 pales into insignificance alongside the funds from the Bank of Mum and Dad, which are supporting almost half the first-time buyer transactions this year.
Funding support for first-time buyers
For those who are not lucky enough to be able to borrow from the Bank of Mum and Dad, there are government schemes available such as LISAs (Lifetime Individual Savings Accounts) and Help to Buy.
With the uncertainty created by the pandemic rife in 2020, the number of first-time buyers fell to 304,000, which is the lowest number since 2015; however, Bank of Mum and Dad contributions were still up £1.1bn from the previous year, largely due to lenders tightening their criteria and pandemic-related uncertainty.
Is the Bank of Mum and Dad new and will it continue?
Far from a new idea, the Bank of Mum and Dad has helped almost 1.4 million first-time buyers over the last ten years with subsidies totalling almost £54bn. Whilst support from family members is expected to peak in 2021, the projections for 2022 are that contributions are likely to fall with loan to value ratios expected to level out and normalise; however, the withdrawal of the Help to Buy scheme from March 2023 will almost certainly mean that more first-time buyers will require assistance in gathering their deposit.
Not just house prices
The additional costs of house buying cannot be ignored, with those who are frantically saving for their deposits often reminded of the additional fees they will incur on top of the price of the property. It is important for a first-time buyer to instruct the best conveyancing solicitors Guildford and other areas have to offer. The best Conveyancing Solicitors Guildford will provide a quote to act on your behalf and are experienced in a wide range of property transactions.
Whilst lenders are creating higher loan to value products and there are other options, the Bank of Mum and Dad remains one of the best funding options for first-time buyers.