Parents to the rescue for home buyers

THE “Bank of Mum and Dad” is increasingly being used to help first-time buyers step on to the property ladder, according to Scotland on Sunday’s annual Scottish house price guide.

The lenders’ requirement for high deposits of around 20 per cent is forcing some parents to use their life savings or remortgage their own properties in a bid to gather funds together for their offspring.

And agents are repeatedly finding parents making the bookings to view properties to make sure their son or daughter is putting their hard-earned cash into the right investment.

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Janice McIvor, the manager of estate agent Slater Hogg & Howison’s Stirling branch has found the number of buyers concluding a sale with a deposit provided by their parents – or parents becoming guarantors on mortgage repayments – is rising.

“There are quite a number of first-time buyers coming to us with their parents as guarantors for a mortgage, or whose parents have remortgaged their own house to give them a deposit,” McIvor said.

Richard Thomson, director of estate agent Clyde Property in Ayr, reports a similar story. “In some cases it is the Bank of Mum and Dad that steps in, which must compromise the parents’ position.

“We get mums phoning up to arrange viewings as they are helping their son or daughter to purchase a flat – it may be their savings or they may have remortgaged.

“Sometimes it is grandparents, parents or inheritance that has made a sum of money available for the deposit. In other first- time buyer cases they have struggled for a number of years and managed to save the deposit.”