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Property News > Second steppers need financial help to move up property ladder
Second steppers need financial help to move up property ladder
Family and friends are often relied upon for financial help by homeowners looking to make their second move up the property ladder, new research has found. Figures produced by Lloyds Bank suggest that there has been an increase in the number of second steppers having to borrow from friends or relatives to make their next move, up to 33% from the 27% recorded last year. 57% of second steppers also received financial support averaging £19,824 when purchasing their first property, and the amount they expect to borrow has increased to almost £30,000, with 58% saying a second move would not be possible but for the generosity of their nearest and dearest. 62% of homeowners plan to use equity from their current property to fund their next move, while 39% will look to use personal savings. However, 22% stated that the Bank of Mum and Dad would be their source of funding, with a further 13% saying they would seek help from grandparents. In order to help out as much as possible, many parents have had to make financial sacrifices of their own, with 54% raiding their life savings, 48% of which plan to downsize in future as a means of raising the money. 40% plan to remortgage, while 29% said they would sell other property, and 19% said they would cut back on holidays or hobbies to boost the finances of their kids. Second steppers are also required to make sacrifices to move up the property ladder, with 28% saying that they will have fewer than they originally planned due to financial constraints - a figure up 16% on last year. ‘Support from generous family and friends remains vital in helping second steppers in taking the next step on the property ladder, despite more second steppers now feeling optimistic about the housing market,’ said Andrew Mason, mortgage products director at Lloyds Bank.‘We continue to see parents make big sacrifices as their children return for help with housing for a second time. However, to ease the burden on parents, we are seeing more second steppers plan ahead for their next big move by saving and paying more to their mortgage,’ he added.Despite the rise in the number of second steppers relying of third parties, the research shows that more of them are also saving money of their own to finance their next move, with 67% saying they regularly put money into a savings account - up from 61% last year. More second steppers are also overpaying their mortgage to increase equity, with 47% opting for this method compared with 41% last year. The research further suggests that second steppers face a shortfall of £50,108 on average, as their second property is typically £135,985 more than the sold price of their first home, while the average level of equity is £85,877. However, access to extra finance is not the main concern for everyone, with 26% saying that they cannot find a suitable property, and 25% suggesting there is nothing suitable out there within their price range. This resulted in 60% of would-be second steppers staying put last year, which looks set to have an impact on the number of properties available to first time buyers.