It is perfectly understandable that many home buyers need assistance when buying their first house. There is a lot of money involved with buying a property, and the size of deposit needed to buy a home is huge.
This places buyers under considerable pressure, and if people are in a position to assist loved ones, they should consider doing so.
It turns out, according to new research looking at 2020, the average gift to buy property was £42,500.
This is close top two-thirds of the average deposit required by a first-time buyer, which stands at £57,278.
There are sizable gifts in London
As you would expect, the gifts from people in London were more generous, to a tune of £102,826; but given the cost of buying property in London, this makes sense. The average size of deposit offered in the South East of the country was £61,500.
However, while the size of average deposit gift in places like Yorkshire or the North West were smaller in size, they were just as important. The average gift for buying a property in Yorkshire was £33,313; but this accounts for 77% of the average deposit needed. In the North West, the average gift of £34,347 accounts for 76% of the average deposit needed.
Some areas see sizable support on offer
In some parts of the country, the average gift was actually higher than the average deposit needed to buy a home. In Wales, the East Midlands, Northern Ireland and the North East, the level of support was significant, and helpful in improving the property.
It is one thing to buy a property, but there is also a need to ensure the property is of a good standard. A lot of buyers like to make home improvements when moving in, and this creates greater financial pressure.
Will Hale, CEO at Key, said: “Finding almost £60,000 to use as a deposit for your first home is tough – especially in the current economic environment – and therefore it’s not surprising that many younger people have looked to take advantage of the stamp duty holiday. In 2020, older homeowners released almost £755 million of equity in order to help younger members of their family meet a range of costs including supporting them with an average of £42,500 to use for a house deposit.”
Will Hale also said; “For many people, these gifts will have been the enabler to them buying their first home and is a perfect example of how intergenerational wealth transfer can deliver positive societal benefits. The stamp duty holiday has certainly been a catalyst for more activity in this area but helping family is always a major motivation for older homeowners exploring their equity release options.”
Will concluded by saying; “That said, it is vitally important that homeowners get specialist advice if they do decide to use some of the value tied up in their home to help their families. Balancing generosity with their own financial security is vital and a good adviser will help them explore all their options.”
Anyone looking to arrange informed and up to date guidance regarding a mortgage should speak with an experienced professional.