Parents Unaware Of How To Help Children With Loans
First time buyers into the housing and home owner loan market are becoming a rare breed at the moment, as banks and building societies tighten their lending criteria and demand large deposits to meet their maximum loan to value ratios.
The vast majority of first time buyers who are able to obtain a home owner loan or mortgage, manage to do so because of financial help from their parents or other relatives, either in the form of a cash lump sum for a deposit, or acting as a guarantor on the loan.
Despite this family assistance in getting a loan, more than half of parents claim that they do not know how they are able to help their children get a foot onto the housing ladder and obtain the home owner loan they require, according to new research from the Halifax.
According to the survey, somewhere in the region of one third of all parents of potential first time buyers said that they were both willing and able to offer financial help to their children to help them to be accepted for the loan they require, yet had not sought any financial advice on the matter.
There are several ways in which parents are able to help their children with a home owner loan, whether this is to provide cash for a deposit, or to act as a guarantor on the loan, or to pay off any personal loan or credit card debts their children may have built up.
Steven Noakes of the Halifax commented on the survey, he said “The bank of Mum and Dad is an important crutch for many first time buyers, yet our research demonstrates that parents aren’t as savvy as they could be when it comes to deciding on how best to help.”
