Almost a third of homeowners looking to move up the property ladder rely on financial support from family and friends, saying they need an extra £21,231 on average, to make their next move, according to new research by Lloyds Bank.
And while so-called ‘Second Steppers’ will make the Bank of Mum and Dad their first port of call, with 17% of asking them for help, 9% asked grandparents to chip in while 6% borrowed money from friends.
According to the bank’s Second Steppers report, the difference in price between a typical first-time buyer’s home and their next home is £126,000. With homeowners getting around £105,000 equity from the sale of their first home, which means they need to find an extra £21,000.
In order to get the deposit for their next move, almost two-thirds (63%) of Second Steppers plan to use the equity from their current property, while two-fifths (41%) will dip into their savings. Of those who would like help from the Bank of Mum & Dad, a quarter (26%) typically want to borrow more than £20,000. Over a third (35%) of Second Steppers admitted they couldn’t move home without this financial help.
Putting off starting a family
Almost a quarter (23%) of those polled have put off starting a family because of the financial constraints of moving home, while 12% are having fewer children than originally planned.
One in four Second Steppers believe it’s now harder to move up the property ladder than it was when they were first-time buyers. To save up for their next home, 41% have been overpaying their mortgage to increase their equity and two-thirds (65%) have either started to save or continued to save money since they bought their first property.
Andy Mason, mortgage director at Lloyds Bank, says: “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.
“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.”