First time buyers need parents' assistance

UK savers waste around £2.9 billion every year, because they are not switching to better current accounts, according to new research.

Many first-time home buyers rely on their parents to help with their first purchase.

Research from First Active said that two thirds of those first time buyers said they would not have been able to purchase a home without help from family.

Overall, it was found 17 per cent of all homebuyers are given help with costs by their parents, with the majority of those people aged under 35.

Due to this trend, a small mortgage market has developed with the 'lending hand' concept.

Catering to the needs of parents and their offspring who require assistance, parents can use their savings to help reduce the mortgage burden on their children by putting a contribution towards the amount borrowed.

For example, if £150,000 is borrowed and parents pay off £50,000 with their savings, the repayments would be on the £100,000 difference.

"Buying a house is a major financial decision for most of us. Making it as affordable as possible is usually top of the list for most first time buyers," Andrew Nicholson, market manager of the reports commissioners First Active told This is Money.