Cradle to First Home: Getting Kids on the Property Ladder
What does it take to get your kids onto the property ladder?
Due to rising house prices and difficulties saving, it’s tougher than ever to own a property. This means your children can end up living at home for longer than anyone would like! Or, they get stuck paying sky-high rent prices.
But – it doesn’t have to be this way.
Here’s a closer look at what you could do now that would make a huge difference in their future.
Why is it harder than ever?
The average age of a first time buyer has seen a dramatic increase in recent years. It now sits at 31 (33 in London) and is predicted to rise as high as 40 in some areas!
These difficulties have come about for a number of different reasons:
- Difficulties saving for a house deposit, e.g. high rent payments
- Outside influences e.g. Brexit’s stagnating impact on the housing market
- Lack of property knowledge
- Being unable to afford extra costs e.g. insurance or high moving fees
A tough road for first time buyers
As of May 2021, the average house price in the UK is £254,624.
The higher a deposit someone puts down, the more likely they are to afford a mortgage – and the more attractive their loan options will be. So, let’s say your child will need a 20% deposit.
The result? A huge amount to save. For some – this makes for a near-impossible journey to buying a house.
What does this have to do with parents?
Unfortunately, your kids’ inability to afford their own home has a negative impact on you as well.
If neither of you are in the financial position to get them on the property ladder, the chance of them owning their own home seems slim. Let’s face it – not many of us want our ‘child’ living at home well into their thirties!
However – does it have to be that way?
Often, you hear about parents paying out thousands for their child’s house deposit. You may find the idea of ever being in that position incomprehensible. But, it’s not as difficult as you may think.
You essentially have 25 years to start saving. Let’s break down how affordable that makes a deposit over time.
First time buyer timeline – deposit price breakdown
Time to talk numbers. Here’s a rough guide to show you how much your child will need for a deposit.
How long would it take you to save?
The recommended deposit size is 20% of the property price, which works out to around £50,000.
Say you’re trying to get your child on the property ladder by the time they’re 25. This means putting away around £166 per month in savings for your child. If possible, we recommend putting away slightly extra a month, say £180, to cover extra costs and rising interest rates.
So, if you saved £150 a month, you’d have saved up £54,000 in 25 years which will not only help with your child’s deposit but also give them a little extra for any additional charges.
When broken down like that, does it sound more feasible?
Ways of saving
It’s advisable to keep this deposit fund in a separate savings scheme, not to be touched until they’re ready to get on the property ladder.
Some different options include:
- A savings account
- A cash ISA
- Stocks
- Bonds
Be aware, some saving options are less reliable than others. We recommend you do the necessary research to find the best saving scheme for you.
Why not replace expensive gifts with a contribution to their savings? This way, you’ll be investing in their future.
Set your children up for success
With today’s property market, knowledge is power. If you’re clued up on everything you need to know, you can pass this on to your kids.
Get help from the experts
Trying to buy a house is difficult, but seeking help from the experts will put your child on the right track. Tell them they don’t have to do it alone!
Consider the local area
When you buy a property, never underestimate the importance of the area it’s in.
Remember – the physical features can be changed, but the location can’t! This will play a huge role in how much your child enjoys living somewhere.
When they come to buying a house, they should always do a search of the area beforehand. This includes looking for things such as:
- Transport links
- Local amenities
- Neighbours
Many of us rush to choose to invest in up and coming areas. But, is this necessarily the best idea if looking for affordable properties?
Make sure to ask the right questions
A common first time buyer mistake is failing to ask the right questions.
Make sure your child doesn’t fall into this trap! When it comes to the estate agent and the seller, if you don’t ask, you don’t get.
Factor in the extra costs
From the beginning – ensure your child knows exactly what owning a home entails. It’s not just the cost of the property itself, but also the ongoing fees, including everything from insurance to utility bills.
Do your research
When buying a home – never underestimate the importance of research!
Always find out everything there is to know about a property before parting with any money.
We can help guide you and your child through the property minefield. We understand how tough it can be to own that first home, so we’ve made it our mission to lower the age of first time buyers.
How do we plan to do that? Equipping them with the tools they need from the start!
From start to finish, we’ve got plenty of guidance for hopeful new homeowners. From mortgages to deposits and beyond, everything you need is in one place. Find all of our advice for first time buyers here.
Last Updated: September 22nd, 2024
