First time buyers 'go it alone'

First-time buyers (FTBs) looking to get on the property ladder are less likely than before to turn to their parents for help, according to the latest findings from the Abbey First Time Buyer index. Indeed, just 9.7% of potential homeowners expect their parents to offer financial help to get their first home, compared to 23% surveyed six months ago. And only 7% expect their parents to be their mortgage guarantor compared to the corresponding 12% from the year before.

Despite this decline, the research found that parents were still helping their children in other areas of buying a home, with 45% of new homeowners, the same as last year, expecting their parents to help them when they move into their new property.

Of those expecting to get financial help from their parents, 55% believe their parents won't expect the money they borrow to be returned while a further 15% believe that they'll never be in a position to be able to pay them back.

Despite the problems facing FTBs getting onto the property ladder, the dreams and aspirations for the perfect first house remain. In terms of what type of home is most preferred by FTBs, the idyllic country cottage leads over the town house, the city apartment and the designer home.

Nici Audhlam-Gardiner, head of mortgages at Abbey, makes the point that the decline in the number of potential homeowners relying on their parents is a positive indication that FTBs are finding alternative ways of funding their homes.

Certainly part of this is due to the rise in the number of mortgage providers offering better solutions to suit the needs of would-be homeowners, such as lower deposits up-front, higher income multiples, extending the term of the loan, or deferring part of the amount borrowed until the end of the mortgage. Abbey for its part has increased its standard income multiple so that it can lend up to five times income, subject to an applicant's affordability.

"Despite the decline parents still have a large role to play. With one in ten people still requiring parental help to buy and over half still needing help on moving day, it's not just the children that feel the financial burden of buying a home," Audhlam-Gardiner says.

01 March 2007 © Moneyextra.com

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