Bank of Granny & Grandad helping a third of first-time buyers
32% of millennial homeowners were given financial help by their grandparents to buy their home, according to research by Trussle.
Overall, 12% of existing homeowners have received financial assistance from the ‘Bank of Granny & Grandad’. London leads the way with over a quarter (26%) of homeowners being helped, compared to just 4% of those in Scotland. This is perhaps unsurprising, considering the average house price in London currently stands at £473,000 – three times Scotland’s average of £155,000.
The amount of financial help received is, on average, over £7,400. Using official house price data, this equates to 30% of a typical 10% deposit worth £23,485. When asked why they received assistance, the majority (63%) said they would either not be able to afford the deposit without help or that their grandparents simply had access to spare money.
However, those who didn’t receive help from the ‘Bank of Granny & Grandad’ but did get financial support from friends or other family members admitted they were likely to get more money, with the average amount being just over £16,000.
Looking at prospective homeowners, the ‘Bank of Granny & Grandad’ looks set to grow further. Nearly a quarter (23%) of would-be buyers are expecting a financial handout from their grandparents, compared to the 12% of existing homeowners who’ve had assistance.
When it comes to repayments, 23% of prospective homeowners expecting financial assistance don’t expect to ever reimburse their grandparents. This is compared to 28% of homeowners who’ve already received the help and don’t expect to ever repay it.
Dilpreet Bhagrath, mortgage expert at Trussle, said: “Saving for a house deposit can be extremely difficult given that the average house price is now nearly eight times income. This can be even harder for those who are renting at the same time – so financial support from family members is often essential to get on the property ladder.
“The research underlines the generosity being shown by grandparents across the UK as they help the younger generation get onto the property ladder.
“But, clearly not everyone can rely on financial help from family and friends. There are a range of affordable schemes to help first-time buyers, such as the Help To Buy Equity Loan and Shared Ownership. However, more must be done to improve access to the housing market and this is where both Government and the industry needs to step up and consider innovative new approaches.”
Source: Financial Reporter