Parents plunder savings to help children get on property ladder

The house price crash has been bad news for many, but for those desperate to get on the property ladder, the good news is that housing affordability is at its best level for six years.

Now, new research from Lloyds TSB suggests that 70% of parents with children over the age of 18 believe now is the right time for their children to get on the housing ladder, and 23% of these plan to raid their own savings to help them do it. On average, such parents have a total of £41,000 saved in order to provide financial assistance to all of their children.

After a rapid decline of first time buyers during 2008, the number returning to the market is gradually beginning to increase. In January 2009 there were 8,600 first time buyers compared to 19,200 in August. In the second quarter of 2009, first time buyers accounted for two in every five (38%) house purchases.

Parents involved in the study said they were keen to help their adult children take advantage of the current market conditions, but just 8% felt they already had a savings pot large enough to help each of their children. Furthermore, one in seven parents (14%) admitted they will need to keep on saving and one in five (20%) said that, while they were willing to provide financial assistance, their children also had to contribute to the deposit themselves.

Stephen Noakes, commercial director of mortgages, Lloyds TSB, said:

“The current housing market presents a real opportunity for first time buyers, as long as they are ready to buy with a deposit. Housing affordability is back to the level it was in 2003, so many parents with grown-up children want to help them take advantage by using their savings.”

In the same study, nearly half (49%) of parents surveyed said they were more likely to provide financial assistance if their children could secure a mortgage that allowed their savings to be returned with interest. And of these, 50% said such a mortgage would let them recycle their savings to help their other children.

Mr. Noakes continued:

“Lloyds TSB’s Lend a Hand mortgage lets parents use their savings without actually having to write their children the cheque. Their deposit is held in a savings account paying a competitive rate of interest and, after three years, they are free to use their savings again as they wish, maybe to help their next child buy their first home.”

If you would like to compare this deal from Lloyds TSB against other mortgage products, visit http://www.totallymoney.com/mortgages and enter your details. You will be contacted by a mortgage advisor who will compare the whole UK mortgage market to find the best deal for you.