More and more homeowners are borrowing money from family and friends in order to bridge the financial gap so they can move up the property ladder.
This is because second-steppers are finding themselves short of an average of £25,450 to afford the next size property, even though they are likely to have gained equity in their current home.
According to the latest Lloyds Bank Second Steppers report, 58 per cent said they would not be able to move house without financial support from relatives or friends, and as many as 22 per cent will seek help from their parents to boost their deposit on the next house.
The amount second-steppers are asking for has increased over the year as well, typically borrowing £4,219 more than in 2017. This is despite them already having been lent an average of £19,824 to purchase their first property.
Mortgage products director at Lloyds Bank Andrew Mason said this financial support from family is “vital”, even though more homeowners are showing signs of optimism about the state of the property market.
“We continue to see parents make big sacrifices as their children return for help with housing for a second time,” Mr Mason stated.
Despite asking for financial assistance from loved ones, two-thirds of second-steppers make regular contributions into their savings account for the big move. This is an increase from 61 per cent in 2017, and as many as 47 per cent of homeowners now overpay their mortgage to boost their equity, a rise from 41 per cent last year.
Mr Masons stated overpaying into current mortgages will “ease the burden on parents”, as homeowners can save more money and reduce the total amount they owe.
According to the study, helping children move up the property ladder is putting financial pressure on many parents. More than half (54 per cent) use their own savings to help, while 48 per cent are considering downsizing so they can release equity in their home to lend to their kids.
Many plan to re-mortgage (two-fifths); 29 per cent said they will sell another home; and 19 per cent claim they would be more frugal with their cash by cutting down on holidays and extra spending so they can give their spare money to their children.
Apparently, it is not just steep costs that are holding second-steppers back from buying their next home. The survey found that 26 per cent had not found the right property for them to make this move yet.
However, it might be the case that they have not considered adapting the properties they have been looking at to suit their needs. For instance, if they have seen a house that lacks an extra sitting room, they could increase the overall footprint by fitting an orangery in Cheshire.
Alternatively, if they want an open-plan kitchen diner, why not invest in a conservatory? This would allow them to extend their kitchen space and have their dining area in a bright room full of natural light.
