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First-time buyers seeking loans from parents
25 April 2008
First-time buyers are being forced to ask family members for a loan following the withdrawal of the 100 per cent mortgage by all major lenders.
Bernard Clarke, a spokesman for the Council of Mortgage Lenders explained that parents who have been homeowners for decades are "likely to have seen a significant equity growth" and would be able to loan their offspring money.
Mr Clarke said: "[Family is] increasingly the main option for first-time buyers. That's great for those who are in the fortunate position of having relatives who are able to and willing to do that – but not everybody's in that position."
First-time-buyers are advised against taking out a personal, unsecured loan to cover a deposit as they could put themselves at risk of getting into debt.
"That may be an option for those who have a large income. But there's likely to be a pretty small number of first-time buyers in that category," said Mr Clarke.
This month, Abbey became the final major UK lender to withdraw the last of its 100 per cent mortgage products, meaning that all buyers will have to put forward a deposit themselves.
