132014Oct

Home Truths for First Time Buyers

Rising house prices and lower than inflation earnings growth are making like tough for first time buyers. As a result, most purchasers can only acquire their first home if they get financial help from their parents.

In a report called “Broken Market Broken Dreams: Home Truths” the National Housing Federation has drawn attention to the challenges facing first time buyers. It concludes that if current trends continue, house purchase will within a generation be beyond the reach of all but the wealthiest buyers.

The typical first time buyer requires a deposit of £30,000 and an average income of £36,500. Furthermore, house prices now cost on average seven times annual salary compared with 4.5 times in the 1960s.

With so many younger potential homeowners being forced to remain in relatively expensive rented accommodation, the number of employed people on housing benefits has doubled over the past six years. The amount now paid at the staggering figure £21.5bn per annum is 150% higher than the amount paid in the mid- 1990s. Encouraging greater home ownership would clearly be beneficial for many people who are effectively now locked out of the housing market.

However it is not all doom and gloom. The rise in house prices has made many homeowner parents and grandparents asset rich and, as a consequence, they are often coming to the rescue. Apparently two thirds of first time buyers now get financial assistance from their parents, double the amount of just five years ago.

In order to learn about how your parents can assist with getting you on the housing ladder in a safe and secure way, a whole of market mortgage adviser like Bower Mortgages will provide the answers to your questions. Bower are also experts in advising on equity release plans including a range of interest only mortgages which are commonly arranged by parents to help out their children.