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First-time buyers turn to families for help
First-time buyers are increasingly being forced to ask family members for help in raising a deposit as the mortgage market tightens under the global credit crunch.
Abbey National became the last major lender to withdraw from the 100 per cent market when it discontinued its products in early April.
This means that home buyers are forced to pay a deposit and first-time buyers in particular are struggling and turning to their families for help, says the Council of Mortgage Lenders (CML).
Given that people who owned a home in the 1980s and 1990s are likely to have seen a significant growth in equity, they may now be able to help their children get a foot on the housing ladder.
However, Bernard Clarke, spokesperson for the CML, warns that not everyone is in this position and those who have no other option may be forced to take out a personal, unsecured loan to cover the deposit.
Commenting on first-time buyers taking out a personal loan, Mr Clarke said: "That may be an option for those who have a large income, whose problem is… that they simply haven't got the immediate liquidity to provide a deposit."
Yet the number of people in that position is likely to be small and they should bear in mind that they will then have two debts to pay off, added Mr Clarke.
Abbey National became the last major lender to withdraw from the 100 per cent market when it discontinued its products in early April.This means that home buyers are forced to pay a deposit and first-time buyers in particular are struggling and turning to their families for help, says the Council of Mortgage Lenders (CML).
Given that people who owned a home in the 1980s and 1990s are likely to have seen a significant growth in equity, they may now be able to help their children get a foot on the housing ladder.
However, Bernard Clarke, spokesperson for the CML, warns that not everyone is in this position and those who have no other option may be forced to take out a personal, unsecured loan to cover the deposit.
Commenting on first-time buyers taking out a personal loan, Mr Clarke said: "That may be an option for those who have a large income, whose problem is… that they simply haven't got the immediate liquidity to provide a deposit."
Yet the number of people in that position is likely to be small and they should bear in mind that they will then have two debts to pay off, added Mr Clarke.
Posted on: [ April 26, 2008 ]
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