The next generation of home buyers are unaware of how hard it can be to buy a house, new research suggests.1
With one in five 11 to 14 years olds1 thinking that they’d be able to borrow as much money as they want to buy a house, it’s thought people aged between 11 and 21 are facing shocking home truths about getting on the property ladder.
When it comes to deposits too, the reality of how much you’d need to put down doesn’t seem to have sunk in either. The research, carried out by Halifax, showed that young men were more optimistic, with 23% of those aged between 18 and 21 thinking a deposit of between £5000 and £10,000 is enough to buy a home1. However this is way off the actual UK first-time buyer deposit mark, which stands at £32,3212.
Preparing them for the future
Owning a home can be one of the best investments you’ll ever make, but as we know, over the last few years it’s got harder and harder for the younger generation to get on to the property market.
Despite this, it seems that the younger generation aren’t being properly prepared for what they may have to face in the future should they choose to buy a home. And with one in ten of those aged between 18 and 211 thinking that stamp duty is money to pay for stamps, we think it’s worth educating your children about what’s involved with buying a house and getting a mortgage.
How can you help?
Talk to them about your home buying experiences
This can prove invaluable and you can start to share this with your family from a young age. They’ll be interested in finding out more about where they live and it’s also a perfect chance to tell them how you bought it.
Talk to them about:
- What a mortgage is
- Where you borrowed money from and what you have to pay each month
- What a deposit is and how you saved the money for yours
- The extra payments you had to make such as stamp duty and solicitors fees
- What happens if you don’t pay your mortgage
If you have older teenagers talk to them about how to prepare for flying the nest
If you know your children will soon be leaving home, it’s a good idea to make sure they are clued up on the ins and outs of both renting and owning their own home eventually. Flying the nest can be the time that younger people get out of their depth with credit and financial commitments, as it’s often the first time they’ve had the freedom and temptation to live beyond their means.
Here’s some blog posts that you could share with them:
Work with them to show how you manage money as a family
Budgeting and money management is something that the whole family can be involved in from a young age. It’ll give them great experience and they’ll start to understand the value of money before it’s time for them to start out on their own.
Why not have a monthly get together with all the family and talk about what money’s coming in that month and what needs to come out.
Show them how important savings are
A great place to start with this is talking to them about their pocket money and letting them see the benefits of saving it up. If they can picture what they could get with their money by putting bits to one side, it’s more likely to sink in and stay with them when they’re older.
If you’re planning a family holiday this year, get them on board with how you’re saving for it and what it means to your monthly spending. The earlier children realise the value of money and savings, the less of a shock they’ll get when they’re a bit older.
We’d love to hear from you about how you teach your children about money and buying a house. If you’ve got any stories please comment below.
1 The research was carried out online by Research Without Barriers for Halifax. It comprised 1,004 respondents aged 11 to 21 years. The research was conducted between 15 and 18 September 2017.
2 Halifax First Time Buyer Review – June 2017