For most first-time buyers trying to save for a deposit, it’s a hard slog especially when rent and other day-to-day expenses mean very little is left at the end of the month to put away.
Doubly frustrating is the monthly repayments on a mortgage can often be cheaper than what you are paying on rent currently.
If you are feeling hopeless about your chances of becoming a homeowner – you are not alone. Despite those already on the housing ladder saying that it’s always been hard to save for a deposit, we think it’s harder than ever and some recent research has borne this out.
According to Aldermore’s first-time buyer index, which surveyed 2,015 prospective and 500 actual first-time buyers, the average deposit size is now £62,572, or around 19% of a property’s value.
The report added that it would take first-time buyers who bought since the start of the pandemic an average of nearly five years to save up enough of a deposit. More than half (58%) of first-time buyers needed to raise a larger deposit due to the pandemic, with the average increase in deposit size of £22,849.
But it’s not just saving for a deposit which must be factored in financially. The cost of a solicitor, the mortgage fees, payments for conveyancing searches, the valuation and removals on average set first-time buyers back by £4,486.
These extra barriers and costs meant that nearly half (48%) of those surveyed did not get the home they wanted or they compromised to get on the housing ladder.
In London, the picture is even more stark, as the average deposit size being put down by people taking their first step on the property ladder has increased by more than £20,000 since last year, according to research from Halifax.
They found that, in the 12 months to February 2020, the average deposit put down by first-time buyers in the capital was calculated at £111,321, but in the 12 months to February 2021 it was put at £132,685.
The average London house price in the 12 months to February was £462,617, with the average deposit as a percentage of the total house price being 24%.
Also, as reported by Halifax, the typical deposit that a first-time buyer needs to put down has increased in every UK region over the past year and now averages nearly £59,000.
The average first-time deposit is now £58,986 or around 23% of the house purchase price, Halifax found, marking an £11,677 increase compared with an average deposit of £47,309 or 20% of the house purchase price a year ago.
Help is at hand
Don’t despair though, as at Impact Specialist Finance, we have more than 30 years of experience in helping first-time buyers get on the ladder. What is encouraging is that there are more and more options available, even if you don’t think you have a large enough deposit.
Lenders, especially those who are not available directly to borrowers and can only be accessed via mortgage brokers like ourselves, are increasingly allowing gifted deposits primarily from family, but also from other sources too.
We are also seeing a rise in properties being inherited with a need to buy out siblings and again, we have a range of options available.
Finally, if you’ve had a small credit blip, especially in the last two years, don’t panic, as again we have a range of lenders that understand such circumstances and may look to assist.
Don’t bury your head in the sand. Please talk to us, as we may surprise you with the options that may be available to you.
To speak to impact Specialist Finance, visit https://www.impactsf.co.uk or call them on 01403 272625.
Dale Jannels is managing director of Impact Specialist Finance
