Bank of Mum and Dad helping their children rent as well as buy
As the struggle to get on the housing ladder continues for many would-be buyers, the Bank of Mum and Dad is in more demand than ever, as consumer journalist Christine Toner reports.
August 30, 2017 | post last updated on November 6th, 2017
The Bank of Mum and Dad has apparently expanded it’s offering. Yes, the much utilised lender (which apparently provides as much property finance as Yorkshire Building Society and is now the UK’s ninth biggest lender) is now not only funding mortgage deposits but also contributing towards rent.
New research by Legal & General found the Bank of Mum and Dad will fund over £2.3 billion of rental payments in 2017 at an average of £415 for every rental payment. One in every ten (9%) renters in the UK will receive help from family and friends to pay their rent, 6% had help with moving expenses and 5% with letting fees.
It’s not surprising that so many people find themselves needing a helping hand with rent. According to estate agent Your Move’s monthly rental index, rents in the UK rose by 3.1% in the year to July with every region except the South West seeing a hike. Meanwhile research by mortgage lender Foundation Home Loans found 30% of landlords in the UK have increased their rents as a result of changes to the buy to let market.
Buying more affordable longer term
Aside from being a smart investment, buying a property is often much cheaper on a monthly basis than renting and is of course helping you build your asset rather than lining the pocket of a landlord. Assuming of course you can afford to save the necessary deposit and have the income to support monthly payments.
There is no better time to make a mortgage application, with 9 out of 10 applications being made via a mortgage broker being approved during the second quarter of this year.
On top of that, recent figures from Halifax found first-time buyers in the UK are on average £651 a year better off buying their own home compared to those who rent.
Furthermore, research from Savills, reported in The Times this week, found the boom in house prices over the last five years means first time buyers who bought in 2012 have now made an average of £54,941.
And while deposits remain the biggest barrier for buyers there are plenty of first time buyer mortgages on the market that cater to borrowers who have smaller deposits as well as several government schemes. It’s well worth looking at the details and,while helping your child rent, keeping an eye on the longer term and more affordable target of helping them become a homeowner.
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