Peer-to-peer (P2P) lending is becoming popular with first-time buyers as many believe it will shorten the time to raise a deposit for a new property, research from P2P lender Zopa reveals.
The survey found that almost two-thirds of aspiring homeowners between the ages of 18 and 40 are using P2P lending to help raise a deposit and over half expect it to reduce the time it will take to reach their target.
Over a third (34 per cent) of those surveyed said it will shave more than a year off the time until they can buy and a further 21 per cent say it will reduce their waiting time by six months. With house prices rising on average 4.6 per cent every year according to the July Land Registry figures, this can be an important deciding factor on getting the home people want at an affordable cost, Zopa says.
An ambitious one in five (22 per cent) is hoping to buy in less than a year, whereas almost half (47 per cent) hope to purchase a home between one and three years’ time.
Two in five aim at £40,000 deposit
Over 40 per cent of people are aiming to save a deposit of over £40,000, but this rose to over half (55 per cent) of Londoners who are waiting to buy. This stands in stark contrast to those who brought ten years ago, when only 2 per cent of savers aimed for a deposit pot of £40,000 or above
Less than one in five (18 per cent) are receiving help from government schemes, such as help-to-buy, but over half of current first time buyers (55 per cent) expect to receive no financial assistance from their families in reaching their deposit target.
For those first-time buyers that have had financial assistance, the size of parental contributions is actually getting larger as deposit amounts increase. For those who brought their houses more than ten years ago, only 8 per cent of parental contributions were over £45,000. This percentage rises to 28 per cent for people who brought less than a year ago.
Zopa’s executive chairman and co-founder Giles Andrews said, “Buying a home is a major milestone in many people’s lives and saving a deposit is getting harder each year as prices and the amount required increases. I’m proud that Zopa is helping first time buyers reduce the time it takes to own a home by allowing them to grow their money faster with better rates. From April 2016 we will be able to help millions of people keep more of their interest as P2P lending becomes part of the tax free ISA wrapper and personal savings allowance.”
