Is the property ladder out of reach?
Sky high house prices, slow wage growth, student loans and rising rent costs mean that getting on the property ladder is challenging.
But the desire to own a home remains strong for many young adults.
Now, the affectionately known ‘bank of mum and dad’ (or bank of other family members) lends or gives money for deposits and other house purchase costs. In fact family loans now count as the 11th-largest mortgage lender in the UK. (Source: Legal & General 2019).
Saving for a deposit
Almost half (47%) of first time buyers surveyed see raising a deposit as the biggest barrier to achieving the home ownership dream (source: Santander First Time Buyer research 2021). With the average deposit at £44,000, according to the Office of National Statistics, this is no surprise. (Source: ONS House Price data March 2019).
Our first time buyer survey (13.81 MB) suggests that first time buyers are aiming for an average deposit of £24,816. This might be more achievable, but in many locations, it'll put them on a higher loan-to-value (LTV) mortgage ratio. For example, if the house you want is worth £250,000 and you have a £25,000 deposit, the LTV ratio will be 90% as you'll need to borrow 90% of the property's value. With a larger deposit, you'll have a smaller LTV ratio and potentially better interest rates.
Family are often the first ones to turn to for support with parents and grandparents playing an increasingly critical role.
Lending or gifting money to family doesn’t come without challenges. If you’re looking at helping a family member or loved one on to the property ladder, these pages will talk you through some of the key points. If you’re looking to get onto the property ladder yourself, maybe with the help of family, read on to see some of the things you’ll all need to think about.
Helping you help them
Linda Murray, a parent and Santander employee said:
‘I have no experience of helping my daughter to get on the property ladder for the first time and no knowledge of where I could go to support some of the decisions that I’m facing. As the deposit giver, I face decisions that I don’t feel informed enough to take – should I use savings, take money out of my own property or take some out of my pension funds when I’m 55? And if I do that what are the implications on my own future? As a parent, I want to help but would like to feel that I understand all of the options before I decide how.’
It can be tricky knowing where to start. So, we’ve put together a list of things you might want to know about:
• from getting up to speed on the property market
• to how helping out affects you
• as well as how you can help if you haven’t got money to contribute towards a deposit.
Home deposit calculator
It can take years to save up for that first home. Take a look at our home deposit calculator to work out how much you, your loved ones or both need to save on a regular basis to achieve their goal.
Applications are subject to status and lending criteria. Applicants must be UK residents aged 18 or over. The amount we will lend depends on your circumstances, the amount borrowed and the property. A higher deposit may be required for a flat or new build.