The natural order of childhood, adulthood and parenthood has been thrown into reverse by the rising cost of tuition fees, living costs and plummeting wages. Although headlines proclaim that wages are now rising faster than inflation, it certainly doesn’t feel that way for young adults trying to make their way in the world. Many people are now relying on their parents for financial support way into their forties, as they try and conquer the biggest challenge there is for a first time buyer – raising a deposit for a house.
Recent research has revealed that housing deposits are the main reason that parents are driven to support their adult children financially. Anyone who has had to pay rent will understand that it is nigh impossible to keep a roof over your head and save for a deposit at the same time, and those beginning their journey on the career ladder have to put up with low pay, and the menace of zero-hour contracts. Even the government backed Help-To-Buy scheme, which allows first time buyers to secure a mortgage with a deposit as low as 5%, has not managed to help people onto the property ladder, as even a 5% mortgage, still usually at least £8,000, is beyond the reach of someone who is working for minimum wage. This presents a real problem, as it means that hard-up young professionals are throwing money away on rent rather than investing in their own security – something which owning a property provides.
The research, which can be found at fidelity.co.uk, shows a more unexpected trend in terms of the age ranges who are needing this support. The need for parents to help their children buy a house is the reason that the age group in need of the most support is 30-39 year olds, with 16-18 year olds appearing to be more independent. This could be because they have yet to leave home or are studying away – the figures show that those with children under the age of 24 spend more on tuition fees than deposits.
When planning your financial future, it is important to take into account that you will likely have to continue to support your children after they leave home – or settle with the idea that they may never leave home at all. This could have an impact on how long you have to continue working, so it may be wise to start a fund early in order to reduce the impact on your finances in later life.
It’s scary how hard it is for first time buyers to get on to the property ladder. Husband bought our house almost 15 years ago with a £99 deposit. £99! Our plan is to save up a deposit for a bigger house and possibly keep this house as a rental and then the kids have the option when they are older to sell it and use the £s for a deposit. x
It’s so difficult isn’t it? I bought my first house with a £2000 deposit and I found saving that difficult. That isn’t anything like enough these days. It’s either house prices or uni fees/costs – don’t feel we can save for both.