Parents' equity 'is the way to get on the property ladder'

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Parents' equity 'is the way to get on the property ladder'

Independent financial advisers have described how, with higher average loan-to-value (LTV) rates, equity from parents' homes is really the only way in which first-time buyers (FTBs) can step foot on the property ladder.

The increased amounts that FTBs are being asked to put forward as a deposit on a property before they have been granted a mortgage is also creating extra difficulties, according to advisers Paul and Catherine Hearnden of Hearnden Associates - the company behind the MyMortgageDirect advisory service.

"I think the banks are protecting their balance sheets," said Mr Hearnden, a director of the service.

The only way FTBs are raising that much capital, Mr Hearnden added, is by having "their parents […] remortgaging their properties to release equity or giving them savings".

MyMortgageDirect's comments come as the Council for Mortgage Lenders revealed yesterday (Tuesday 9th) that the average LTV rate across the country is less than 60 per cent. However, this has meant that for existing homeowners who have been on the property ladder for some time, the average equity on their properties is between ten and 30 per cent of their property's value.

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