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Families Called Upon To Provide Deposits

by Arouse

Those attempting to purchase their first home are increasingly
looking to their family to help stump up the initial deposit
needed, it has been claimed.

Residential property industry commentator the Council of
Mortgage Lenders (CML) states that the proportion of first-time
buyers looking to parents to help them bring together a deposit
is on the rise. The trend has resulted from the credit crunch
leading all major lenders to withdraw 100 per cent mortgages
(which lend sums covering the deposit required). Lenders in the
UK have learnt lessons from the subprime mortgage crisis in the
US, which resulted in large numbers of homeowners defaulting on
their mortgage payments by borrowing more than they could
afford.

While some families might be in a position to help their
offspring raise a deposit with relative ease, others might
consider secured loans as a means of gathering together the
required capital. The equity growth enjoyed by those who have
owned their home for a number of years could be helpful in
providing the security needed to take on such a loan.

Bernard Clarke, spokesperson for the CML, commented on the
trend: "[Family is] increasingly the main option for first-time
buyers. It is another option, but it's only open to those who are
able to call upon that help and whose relatives are able to
provide it. But we have seen [parents] who have enjoyed equity
growth in their own property over a period, being able to draw on
that to help relatives who are first-time buyers with a
deposit."

However, he added that the slowing property market was likely to
see parents become increasing unwilling to provide financial
assistance to their children. As a result, those hoping to raise
a deposit in the coming months and years but currently harbouring
a number of debts might like to consider a debt consolidation
loan as an option. By combining their debts into a single monthly
payment, such borrowers could provide more structure to the way
that they tackle their debts and work more efficiently to get in
a position where saving funds becomes a real possibility.

Alternatively, secured and unsecured personal loans could be
taken out by those wishing to raise a deposit without parental
assistance - although Mr Clarke stated that anyone doing so would
have to consider their situation carefully. "They would need to
look at their individual circumstances and see whether that's an
appropriate option or not. Clearly, they would then have two
debts to service," he stated. "That may be an option for those
who have a large income, whose problem is that they simply
haven't got the immediate liquidity to provide a deposit."

Loans are becoming an option to consider for increasing numbers
of people given ongoing restriction in the financial markets,
which is affecting ever larger numbers of consumers' pockets.
Recent figures released by price comparison service MoneyExtra
suggested that the impact of the credit crunch was extending
beyond the financially vulnerable. First-time buyers who in more
favourable circumstances might have considered themselves to be
in a reasonably stable state were being forced to borrow
increasing sums in relation to their annual earnings.

Abbi Rouse writes for All About Loans where visitors can apply
for <a href="http://www.allaboutloans.co.uk/personal/">personal
loans</a> and also focuses on <a
href="http://www.allaboutloans.co.uk/">UK loans</a> , and <a
href="http://www.allaboutloans.co.uk/secured/fast-loans.html">fast
secured loans</a> for UK Homeowners.

Syndicated by Top Gazebos - www.topgazebos.net

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