Homeowners looking to move up the property ladder are increasingly turning to family and friends for financial support.
Whilst first-time buyers often rely on the Bank of Mum and Dad to help with their deposits, those planning their next move also depend on their support, according to the latest ‘Second Steppers’ report from Lloyds Bank. Homeowners that need a helping hand expect to borrow an average of £25,450 to take the next step up the ladder. Nearly three-fifths (58%) claim that if they didn’t have financial support from family and friends, they wouldn’t be able to move.
The number of Second Steppers relying on support from family and friends is increasing, with 33% saying they need help, up from 27% last year. The amount they expect to borrow has increased by £4,219 compared to last year.
Whilst most Second Steppers plan to borrow from their parents, 13% said they would ask their grandparents for help, whilst 6% said they would turn to friends for support.
Parents often have to make big sacrifices to help their children get onto the next rung of the property ladder.
More than half (54%) said they would dip into their savings to provide financial support, whilst just under half (48%) plan to downsize in order to free up funds for their children. Around a third (29%) said they would sell another property so they could give financial help, with one in five (19%) planning to sacrifice holidays or hobbies in order to support their children. Two-fifths said they would remortgage and extend their borrowing so that their children can make their next move.
Other obstacles facing Second Steppers
A lack of funds isn’t the only barrier that Second Steppers face. One in four (26%) said they haven’t found the right property yet, whilst a similar number (25%) said there was a lack of affordable property to buy.
More than one in 10 home movers (14%) said they can’t afford the cost of moving, whilst 18% said the cost of stamp duty is too high. A further 23% said they weren’t sure if they could get a big enough mortgage to buy their next home.
If you’re planning on moving up the property ladder, seek advice on the range of options available to you. A range of lenders offer mortgages which allow you to borrow up to 95% of the property value, which may help those with a limited amount of equity in their existing home.
Second steppers return to Bank of Mum and Dad