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The Bank of Mum and Dad – Getting on the Property Ladder

The Bank of Mum and Dad – Getting on the Property Ladder

*This post was written in collaboration with the Post Office. 

 

We’ve been on the property ladder for a few years now. Buying our first house was one the most exciting things I’ve ever done. I loved everything about the whole process from start to finish. Both Hubs and I have always been interested in property, so heading round to have a nosy at different types of houses was so much fun. Our first viewing ignited something in both of us and we became so passionate about finding the perfect house for us. We would sit for hours adding new properties to our ‘must view‘ list. I made so many appointments with estate agents that in the end we found ourselves on first name terms with a few!

For us, buying a house was something we wanted to get right the first time. We wanted our first home to be our forever home. That meant spending an incredible amount of time thinking about what kind of house would suit us when we bought and what would continue to suit us as life took its natural course. The trouble with buying a forever home from the outset, is that the prices of the houses we really wanted didn’t always match our budget. We’d saved hard for some time and Hubs had downgraded his car so that we had the best chance of purchasing the right house for us. We pooled our savings and had a respectable sum. At the time though, we knew it wouldn’t quite be enough.

 

Photo Credit

 

Dilemma…

 

After many months of searching, we finally found the house we wanted. I’d been told numerous times that I’d ‘just know’ once I walked into the property I’d want. I must admit, I thought this was a little far-fetched. We’d seen so many, they all had good and bad points. It had to be a compromise, right? Wrong! The very first time I walked through our now front door, I knew this house was for me. This would be the place I settle, get married and have children in. I wanted it and I wanted it now!

Inevitably, this property was one of those that we really had to stretch ourselves to afford. At the time I was still on an apprentice’s wage and so it would be down to Hubs to pick up the bulk of the costs. We left after that first viewing with a heavy heart. Wanting the house so much, but wondering if it just wasn’t meant to be.

 

Photo Credit

 

Homeowners…

 

After much thought, plenty of to-ing and fro-ing and even a few tears. We decided that we really did want this house. It was too good to let go. So, we decided that we would talk our situation through with my parents. We went back to show them the house and they fell in love with it, just like we had a week or so before. They could see the potential it had and how much Hubs and I had pinned our hopes on this place becoming our home.

We’ve all heard the old saying ‘never a borrower, nor a lender be’, but it was becoming increasingly clear that borrowing money from my parents was the only way we were going to get the house of our dreams. We had the majority of what we needed, but my parents were more than willing to give us a helping hand to secure our future. We sat down as a family and agreed on the amount we would need to borrow in order to get by. We made it very clear what the funds would be used for and most importantly we agreed on payback terms. Its not unusual though for parents and children not to have a payment plan in place. In fact according to research completed by the Post Office, as much as 87% of first time buyers don’t have an agreement in place. It can be a really difficult conversation to have and if it’s something you are struggling with you can use this Conversation Guide to help make things easier for everyone! My parents are great and there really was no pressure from their side to get the money back. I wanted things to be clear-cut though, so we devised a monthly payment plan. In my eyes, proactive reimbursement of funds shows the lender how grateful the borrower is. Plus, I didn’t want to be indebted any longer than was necessary.

 

Would I borrow again?

 

I absolutely would! For me, the borrowing process was made very straightforward because we’d spent some time agreeing on terms before any money was exchanged. The fact that everyone knew where they stood made me feel comfortable and the fact that there was a payment plan in place meant that there was no confusion further down the line. I didn’t find the process stressful at all as we were able to buy the home that we had fallen in love with and I know it made my parents happy to know they had helped us in achieving that.

 

Some interesting statistics…

 

  • The majority of parents don’t formalise and agreement with their children when they lend them money.

 

  • One in six first time buyers are taking long-term loans from their parents in order to buy a house.

 

  • Parents loan an average of £24,347 to help their children get on the property ladder.

 

Did you have any help when buying your first house?

 

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56 Replies to “The Bank of Mum and Dad – Getting on the Property Ladder”

  1. I honestly don’t think I will ever be able to afford a mortgage. With us both on very low incomes and not able to ask our parents for help it just doesn’t look likely. Plus, I’m not getting any younger and the longer it’s left the less time we will have to pay it off. #BigPinkLink

  2. We’d never have been able to get on the property ladder without the help we had from both mine and my husband’s parents – and it wasn’t even a forever home, just a 1 bedroom place! But it did give us the leg up that we needed to stop throwing our money away on rent. We saved really hard once we moved in and were able to overpay the mortgage by a huge amount, which then allowed us to move on. But I’m so grateful to our parents for giving us that help in the first place. #bigpinklink

  3. We didn’t get any help, just a boring old bank mortgage. Our first house was really run down so we spent some time fixing it up. Lucky for us the property market boomed so we could sell it at a good price when we needed to move. #blogstravaganza

  4. How lovely of them to help. My husband had some inheritance which we used to buy our first home. We wanted to get it just right too and felt as though it was the right time and way to invest the money. We did end up moving a couple of years ago because life threw some challenges our way, but sometimes I think my heart still lives in our old house.

  5. We’ve bought a few houses over the years and I’ve only had to borrow from my parents once. We borrowed £5000 to help with the deposit on our last house and we only managed to pay it back when we sold that house and moved into our current one 8 years later! I am very glad I am now trying to get on the property ladder now though, it was much easier and cheaper when we did it!

  6. I have never been in a position to buy my own home and to be honest I feel I would worry about how I would afford any repairs etc that could come up. I have to say I’m not shocked that so many parents lend money without agreeing terms however if they are happy to do it’s a really generous gesture #blogstravaganza

  7. We are lucky in that we did have some help to get on the property ladder but unfortunately not in our forever home. It must be so great to have your bring your babies home to your forever home knowing that they will grow up there. The housing market is a nightmare. Some shocking statistics in this article.
    #blogstravaganza

  8. We are fortunate that my husband bought a condo about 8 years ago when he was single and the market was down. We look to sell it for a big profit that will help us buy our forever home. We will probably list it this summer and rent for a year and see if the market is going to start to dip then buy low. Fingers crossed! #blogstravaganza

  9. I think we got some help and in general our parents try to give us even money we don’t ask for -.-. I had to refuse many times, I would find big $$$ on our bank accounts. They are weird. I don’t dislike money and I’m grateful for the help, but if we do not NEED them I don’t see whyyyy :D.

    We are lucky because Finnish governments tries to favour people who want to buy a house, for instance government can act as guarantee in a loan quite easily, so you don’t need the front money in practice.
    #Blogstravaganza

  10. It’s so hard isn’t it! We have saved hard and invested well so haven’t needed a loan from family but we’ve certainly had a bit of help along the way. A gift of furniture when we first moved out and some money left to us in wills. Had both husband and l not invested in our employers share schemes from our late teens things would have been different. #blogstravaganza

  11. we didn’t have help when we bought out first house from our parents, but we are now the generation that will be helping our children get on the property ladder in the next few years #triumphanttales

  12. We’re yet to own our own home as Hubby has awful credit history and houses in our area are really expensive due to our close access to London. We are considering shared ownership just to get on the ladder but I’m not 100% keen on it yet! #blogstravaganza

  13. This is an interesting post! We are only on the property ladder because of my parents help. They gifted us a small (large to us but small in the grand scheme of things), that along with a 5% deposit on a 40% share of a shared ownership house meant we could buy. We then stepped up and bought the rest of the house a couple of years back and only now are we able to start looking at houses we actually want. It is very hard for people to get on the property ladder now. #TriumphantTales

  14. We private rented for years and then after being on the housing list for the best part of 16 years we got offered a newbuild property by the housing association in our local area – the area I grew up in. I can’t tell you how happy I was. I can’t see us buying anywhere anytime soon, not while we are secure in the beautiful house we have. But at least by not wasting lots of money on private renting it’s likely to be more achievable in the future. Really interesting post. Sorry for the late comment but thanks for sharing with #TriumphantTales.

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