As parents, the property market may be fairly unrecognisable from when you were purchasing your first home. However, taking that initial step on the property ladder still remains a desired rite of passage for many young adults. The concept of not owning a property can seem inexplicable for some parents, but for potential first-time buyers, a mortgage can often seem fairly unattainable.
The property-buying landscape may have considerably changed, but one thing hasn’t - the need to save. With the average property price resting at an astounding £292,921, according to data from Your Move and Reeds Reins, it’s no surprise that many parents are wondering how their children will ever afford their first deposit. Apart from splurging a sum of your cherished retirement fund or dipping into the savings you were keeping for that well-deserved trip of a lifetime, can you, as parents, actually help to buy?
The good news
Despite 23% of first-time buyers planning to use parental or family assistance to fund their deposit, as stated in our First Time Buyer Index Report, there are other ways to support your children waiting to take their first step on the property ladder. One way is by letting your children check-in at the favoured Hotel of Mum and Dad.
The Hotel of Mum and Dad is open for business
As house prices have risen, so have the number of young adults living at home; not surprisingly, there were 618,000 more in 2015 than in 1996. With reduced or even zero rent, food in the fridge and bills included, the Hotel of Mum and Dad would certainly receive 5* reviews on TripAdvisor. But, is it all it’s cracked up to be? Living at home could allow your son or daughter to save up to £10,000 a year, so yes, it can be worth it (even if they have to do chores to earn their keep!). Although living at home isn’t an instant fix, it can help re-enforce the value of money and prepare them for the future.
Despite causing an unfortunate drain on the Wi-Fi or aiding an increasing laundry pile, the Hotel of Mum and Dad can really provide parents with the means to help their children save for a deposit, which is invaluable. And, best of all, you may even enjoy their company!
Understanding the full costs of a mortgage
Alongside a deposit, there are a number of additional costs that come with applying for and processing a mortgage. Understanding these is the best way your children can prepare to save. At Aldermore, we outline all of our charges clearly in one document, detailing legal fees, application fees and more, so first-time buyers fully understand how much they need.
Three ways to make first time buying easier
- Start saving as early as possible: Encourage your children to embrace the savings habit. Putting small amounts aside on a regular basis will soon build a nest egg that can be used to pay for the many costs associated with purchasing a property. Alongside this, why not try giving them lower value Christmas and birthday presents, and pay some cash into their savings account instead? This will help them in the long term.
- Make the most of government schemes: Point out the benefits of schemes such as the Help to Buy: ISA, which allows first-time buyers to receive a 25% government bonus when they complete on the purchase of their first home.
- Cut down on unnecessary spending: Teaching children to budget from an early age can really reap rewards. It seems obvious, but by limiting their spending on leisure, such as on clothes and food, as well as shopping around to find the best price for items like car insurance, first-time buyers can really cut down their unnecessary outgoings.
Purchasing a home is a rite of passage for many young adults, and will set them up for life. With help from parents, whether that be providing early guidance on budgeting and saving, welcoming them back into the family home for a few extra years or providing invaluable advice, purchasing a home no longer remains an unattainable dream, but one that can be achieved with a little patience.
The content published on this website is intended to provide information only. The reader should seek advice from experts on the subject matter and independently verify the accuracy and relevance of any information provided here before relying upon it or using it for any reason. You can view our terms and conditions here.