First-time buyers (FTBs) are increasingly relying on grandparents to help them on to the property ladder, new research has revealed.
Santander reports that financial support from grandparents has increased four-fold compared to those who bought their property five years ago, as almost one in 10 (8%) of FTBs now rely on grandparents for their deposit, compared with 2% five years ago.
Almost a third (32%) of FTBs currently house hunting now use a family loan to help with the deposit – a significant increase from the 13% of current homeowners who asked for financial help from their families over the past five years.
Last year, Housing Minister Gavin Barwell encouraged grandparents to leave money to their grandchildren, stating that his mother was leaving her estate, which includes a £750,000 home, to her five grandchildren.
Santander’s research also found that FTBs estimate that their deposit will typically be 32% of their income and that one in five (19%) expect to pay more than half of their annual income on their deposit.
In contrast, current homeowners estimate that when they bought their first home, their deposit was an average of 20% of their yearly income, with only 5% spending more than half of their salary on a deposit.
And it seems that more women expect to pay a big chunk of their income on a deposit for their first home, with 23% expecting to spend more than half of their annual salary on their deposit compared with just 14% of men.
It takes longer now to save a deposit
FTBs who are saving for a deposit now expect to do so for an average of five years – a year longer than those who bought their first home five years ago.
On a more positive note, FTBs are optimistic about the property market, with 10 million UK adults looking to buy their first home in the next five years.
Miguel Sard, managing director of mortgages at Santander UK says: “Despite having to use alternative income streams over and above their salary – such as relying on the Bank of Gran and Granddad – 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.”