2023-06-26 02:25:05
“Think of a house of 200,000 euros. If you have to contribute 30% between the entry and management costs, it is 60,000 euros. Who saves that at 30 years old? With salaries of 1,500 euros, how many years do you need to save 60,000?” It is not a school problem, but a daily situation for those under 35 who want to get a mortgage. The vast majority of them will need their parents if they want to become owners.
Until 74% of young people who buy a house do so with the help of their parents. Parental support is requested to gather the necessary savings to buy a home, that is, 20% of the appraised value.
It is an essential step, since the mortgage loan covers up to 80% of the price. To this are added the management costs, which are usually estimated at 10% of the value of the home.
[Los ahorros necesarios para comprar casa se disparan un 21% en 4 años: ahora se necesitan de media 42.300€]
The overwhelming percentage of young people who need their parents has been noted in the Real Estate Barometer, ‘The market sentiment of real estate professionals’, from UCI (financing specialist entity) and its professional development area, SIRA.
“Taking into account the approval of the Housing Law, focused essentially on young people, we decided in this edition to ask real estate agents specifically about them. And one of the things we ask is how they are financed,” José explains to this newspaper. Manuel Fernández, Deputy Director General of UCI.
It was a novelty, although the result does not surprise him. It does not really surprise any of the voices consulted by EL ESPAÑOL-Invertia. “Almost all mention it or say that their parents can leave them something“, points out José Manuel Montes de Oca González, mortgage manager registered in the registry of agents of the Bank of Spain for ING.
Only two out of ten sales operations in agencies are carried out by people under 35 years of age, a figure that has fallen about 14% in the last year. 74% of those who finally close the agreement do so with the help of their parents, compared to a 22% who have their own savings.
[El inmobiliario asume que el Euríbor subirá al 4%: los hipotecados a tipo variable pagarán 300€ más de media]
In any case, they are houses of modest dimensions. The typology most demanded in real estate agencies by young people are one or two bedroom apartments.
72% prefer this option, compared to 24% who are looking for an apartment with three or more rooms. Less than 2% of young people buy single-family or attached homes.
Necessary savings
Parental rescue is increasingly necessary. The savings required to buy a house have skyrocketed by 21% in four years: now an average of 42,300 euros is needed, compared to the average 34,906 euros that was enough in May 2019.
This, at least, if you intend to purchase a typical 2-bedroom home, according to Idealista’s calculations. The increase is explained by the rise in housing prices, and varies considerably depending on which area of Spain you want to buy.
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so, in Palmawhich leads the ranking, must have some savings of 106,000 euros to finance a two-bedroom home. In Barcelona, an average of 97,000 euros is needed, and in Madrid, 72,300.
The most affordable? Jaén, where the entrance will require an average of just 21,103 euros. They are followed by Zamora (25,804 euros) and Lleida (26,151 euros).
It’s not just prices that have gone up. Financing conditions have also become more expensive due to the rise in rates. That affects what is paid, for example, the first year.
Thus, from the average fee of 352 euros that was paid for a two-bedroom apartment in our country in 2019 with a 30-year mortgage, it has now gone on to pay 513 euros for the same. At least for the first year. In other words: quotas have risen 46% in four years.
[La resaca de la burbuja impedirá que los precios de la vivienda se desplomen: a España le faltan 500.000 pisos]
And this is also where parents help. “Recently there are cases in which parents they are getting more involved if possible with their children, because they are helping them with a sufficient contribution so that the installment remains payable,” says Ricardo Gulias, CEO of RN Tu Solución Hipotecaria.
That is to say: “that with this additional contribution, the fee suits what they can afford and continue living happily.”
Cash or double guarantee
How do parents help? Contributing cash is the classic option, but, as Gulias warns, “it must be clear that not all parents can.”
The option of the double guarantee is then opened. What does it consist of? “If the parents have a home free of mortgage, they also put that home as collateral of the operation. Thus, the mortgage responsibility is distributed between the home that is acquired by the child and another small part on the parent’s home,” explains Fernández.
In other words, of the total value of the house, 80% is covered by the mortgage, and the home free of charge from the parents does the same with the remaining 20%. The advantage: when the debt drops below 80% “the parents’ home can be released”.
In addition, Montes de Oca explains, “parents are not debtors, they are not directly responsible for the debt in case of non-payment.” But there is, of course, a disadvantage: “They can repossess the house.”
“It is a very complicated and expensive operation, and it is rare and difficult,” he summarizes. House prices are not expected to drop anytime soon, not by much. The end of home rescues is not in sight.
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