Previous reports have extensively documented how first time buyers frequently need help from family members to raise the necessary deposit to buy their first house. However, a new piece of research has highlighted that it is not just first time buyers reliant on this help – people taking their second step on the property ladder can also require support.

Financial Assistance to Move up the Property Ladder

The latest Lloyds Bank Second Steppers report found that almost a third (32%) of Second Steppers think they will still rely on financial help from family and friends to move up the property ladder.

Second Steppers plan to raise the deposit required for their next move by borrowing money not just from the ‘Bank of Mum and Dad’ (17%), but also grandparents (9%) or friends (6%). Of those who require financial help from their parents, almost half (47%) believe that their parents have had to make sacrifices in order to help them move up the property ladder.

According to Lloyds Bank, the price difference between a typical first time buyer home and a Second Stepper’s ideal home – typically a detached property – is £126,000. However, the average equity level of £105,068 from the sale of their first home can help to reduce this gap by 83%, meaning that Second Steppers need only add an extra £21,005 to their existing mortgage.

Second Steppers Plan Ahead

One in four Second Steppers think it’s now harder to move up the property ladder than to get on it in the first place. As such, 41% have been overpaying their mortgage to increase their equity and a third (34%) have increased the amount that they save every month. The research also revealed that 65% have either continued to save or started to save since they moved into their first property.

“Parental support continues to play a vital role in helping young people to get on the property ladder,” commented Andy Mason, mortgage director at Lloyds Bank. “However, it is clear that despite improved conditions for this part of the housing market, Second Steppers will still rely on the ‘Bank of Mum and Dad’, with hard-pressed parents being once again called on for financial help. Without this extra financial support, Second Steppers believe that they wouldn’t be able to make the next move on the property ladder for some time.”

Bank of Mum and Dad a Major Lender

The extent to which parents are helping their children move onto or up the property ladder was revealed in an earlier piece of research by Legal and General, which found that the Bank of Mum and Dad will lend over £6.5 billion in 2017, up from £5bn in 2016, providing deposits for over 298,000 mortgages, and helping others to purchase homes worth £75 billion.

According to Legal and General, the Bank of Mum and Dad is now on a par with the 9th largest mortgage lender in the UK (up from no.10 last year) and will be involved in 26% of all property transactions that take place in the UK market this year.

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