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Second steppers need support from family to move up the property ladder

Nearly one in three second steppers require over £20,000 in financial support from the bank of Mum and Dad to buy their next home.

Research from Lloyds Bank has found that 32% of home movers looking to move from their second step need an average of £21,231 of financial support from family to help jump from their first property.

The shortfall arises as the house price difference between a typical first time buyer and second stepper usually buying a detached property is £126,000.

The average equity raised selling the first home is only £105,068 reducing the property price gap by 83%, however, home movers will still need an extra £21,005 to add to an existing mortgage.

In addition, about 32% said that not finding the right property remains the biggest issue that may delay the sale of their current property.

With competition from buy-to-let investors and reduced supply of suitable properties, home movers are remaining in their existing home and saving for a bigger deposit.

Help with parental contribution

Second steppers already have experience with owning a property and arranging a mortgage and still find themselves dependent on support from family.

The research revealed of all these home movers 63% plan to use equity from their current home while 41% will access their savings.

In fact half of second steppers also required help as first time buyers when buying their first property with an average deposit of £21,512 from parents or grandparents.

The ones considering to ask for help from family members about 26% are typically looking at borrowing more than £20,000 and 35% felt they could not make the next move on the property ladder without this financial assistance.

Of those asked, 17% of second steppers will raise the deposit from the bank of Mum and Dad, 9% from grandparents and 6% from friends.

Planning ahead can help with 41% overpaying their mortgage to increase their equity, 34% increased the amount that they save every month and 65% are actively saving since they moved into their first property.

Without family help to upsize, the only option is for remortgage buyers to stay in their existing home and continue saving more for a bigger deposit.

Making sacrifices for the next home

Andy Mason, mortgage director at Lloyds Bank said parental support continues to play a vital role in helping young people to own their own home.

Of those who require financial help from their parents, 47% believe that their parents have had to make sacrifices in order to help them move up the property ladder.

If parents do not have enough savings to hand, the rise in house prices allows the older equity release mortgage buyer to stay in their home while accessing the wealth in their property.

This is a type of living inheritance where parents or grandparents can release equity now to give to children or grandchildren and repayments are not required as interest is rolled-up in a lifetime mortgage.

Some second steppers are also making a sacrifice with 23% stated that they will have children later in life than originally planned, 12% having fewer children than originally planned and 13% have changed their career.

In addition to asking family for help, it is encouraging to see many second steppers are planning ahead by overpaying their mortgage and making bigger contributions into savings accounts, said Mr Mason.

What are your next steps?

Speak to our LCM mortgage advisers if you are planning to move home, buying your first home, remortgaging your existing home to a new cost effective mortgage deal or are a buy-to-let investor.

For equity release buyers our London City Mortgage brokers can recommend lifetime mortgages allowing you to receive cash from your property to help maintain your standard of living as costs rise and holidays.

Start with a free mortgage quote or call us and we can take your details. Learn more by using the mortgage cost calculators, equity release mortgage calculator and property value tracker chart.

Use your dashboard to access online mortgage quotes, money off vouchers and start your mortgage application online 24/7 on desktop, tablet or smartphone.

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    Equity Release may involve a Lifetime Mortgage or a Home Reversion Scheme. To understand the features and risks, please ask for a personalised illustration. Equity Release may affect your entitlement to means tested state benefits and will impact on the size of your estate. For Equity Release London City Mortgages charge a fixed fee upon completion of £695. For Mortgages a fixed fee is charged on application. Typically this is from £295 up to £495 for the services selected.


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