Second steppers leaning on Bank of Mum and Dad

UK consumers could be biting off more than they can chew when it comes to funding a move to a new home. 

Research by Lloyds TSB has discovered one in five second steppers – those looking to move on from their starter home – are thinking about asking their parents to help them fund the move. 

This is because there is an equity gap between how much their current property is worth and the value of the house they have their heart set on. 

Indeed, only 77 per cent of those questioned are confident they will be able to use savings or equity in order to trade up. Last year, people typically asked their parents for a loan of £19,216, up from £12,746 in 2011.

Around two-thirds of respondents have been looking to climb the ladder in the past 12 months, but have been unable to do so for a number of reasons, such as not having the necessary cash to finance such as deal. 

Laurence Mann, head of mortgages at the Bank of Scotland, said: "Parents have long been helping to fund their children's first home, but many are now having to provide further support as they move up the ladder. 

"This indicates that these customers still need further support. To achieve a sustainable housing market we need to see movement throughout the market. If second steppers get stuck on the first rung, movement at the bottom half of the ladder comes to a standstill."

Of course, individuals need to make sure they do not compromise themselves financially by trying to climb the property ladder. For example, if they cannot afford to pay back a mortgage to the bank and a loan to their parents, this could create tension.

By setting out a structured system for all of their outgoings, people can make sure they are financially responsible, do not overspend and are able to meet all of their repayments. 

By James Francis