The Clydesdale and Yorkshire banks have revealed that 84% of first time buyers in the under-thirties age band need financial support from their parents. In 2005 this figure was just 38% according to a report by the Council of Mortgage Lenders (CML).

The CML reported in January 2011 that just under half (47%) of first time buyer purchased properties were subject to a joint income.

Retail director for Clydesdale Bank, Steve Reid, had this to say: “It is becoming increasingly commonplace for first-time buyers to require financial help from their parents when buying their first home. At Clydesdale and Yorkshire Banks, we recognise that first-time buyers are vital to keeping the property market moving and are committed to helping them with our range of competitive products.”

All very well, but there still remains the issue of raising a deposit. Even the lowest deposit mortgages call for a down payment that can stretch borrowers to the limit, and with finances being stretched so far with a lack of pay increases and such a hike in the cost of living, people will be wondering how on earth they will get a foot on the property ladder.

Hence such a high percentage asking for financial help from parents. But how will those parents help if they too face the same cost of living issues?

Equity Release can be a way onto the Property Ladder

Those aged over 55 who own a property could release equity to help their children onto the property ladder. Over the years, property prices have increased such that many homeowners are now in a position to make use of the equity they have built up. The cash released can be used for anything and an equity release plan comes with safeguards such as never losing the home or owing more than it is worth, providing they are Safe Home Income Plans (SHIP) endorsed.

Many parents are more than happy to help their children with an ‘early inheritance’ and see them onto the property ladder using equity release plans. Take specialist advice to make sure it is the right course of action for you.

Equity release may involve a lifetime mortgage or home reversion plan. To understand the features and risks, please ask for a personalised illustration. 

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