Second-steppers facing problems making their next move

taking the second step on the housing ladder may be a problemWhilst the media spotlight often falls on the plight of first-time buyers trying to get onto the housing ladder, there’s increasing evidence that those homeowners looking to make their next move are also facing problems, both in supply and affordability.

Rising prices can lull second-steppers into a false sense of security, meaning that until they start researching the market, it isn’t apparent how much extra cash they will need to make their move.

This can be particularly true for those who bought their first property before the introduction of the stricter lending rules brought in under the government’s Mortgage Market Review. The new affordability criteria for mortgages can mean that their chances of getting much larger loans are more limited, and they often need larger deposits to make their move.

From a flat to a house

Second-steppers are often looking to make the transition from a flat to a house, looking for somewhere where they can raise a family and put down roots. However, as many buyers are discovering, making this move can require a considerable amount of extra borrowing. In some cases borrowers need to contemplate almost doubling their mortgage.

Lloyds1 reports that more and more second-time movers are asking friends and family for a loan or gift to bridge this funding gap. They estimate that second steppers need on average £125,694 to buy their next home, and often borrow more than £22,000 from the ‘Bank of Mum and Dad’ to complete their purchase.

However, second-time buyers do have a number of factors on their side. They’re often part of a couple where both are in work, meaning there are two incomes to finance mortgage repayments and, depending on when they made their first purchase, will have built up equity in their existing property.

1Lloyds, Second steppers still need Bank of Mum and Dad, 2015

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