An increasing number of young people are receiving financial support from their parents to buy real estate because the absence of their own down payment on a home loan is the primary obstacle preventing them from achieving homeownership, according to Tanel Rebane, head of retail banking at Luminor.
“The dream of owning a home has changed over the years. 10 to 15 years ago, saving for a down payment on their first home was not such a significant issue among young people. However, with the increasing value of real estate, securing a home loan has now become an unattainable goal for many,” Rebane said in a press release.
As a result, the question of the size of the down payment for a home loan and how to accumulate the necessary funds has taken center stage.
“With the general guideline suggesting a 15 percent down payment, it is highly advisable to get acquainted with the terms of the Kredex home loan guarantee, if necessary, in order to lower the percentage for the down payment,” the expert advised. Furthermore, in specific situations, utilizing supplementary collateral is an option, but it necessitates that the property offered as collateral adheres to specific conditions.
Without support from their parents, young people typically face a substantial time frame to accumulate the required funds.
“Considering that early adulthood often comes with lower incomes, saving a substantial amount can often prove challenging, particularly when balancing expenses such as rent or other financial obligations. Consequently, it’s not uncommon to realize that it might take as long as 10 or even 15 years to amass the necessary down payment,” Rebane said.
Source: BNS
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