Aspiring homeowners could be underestimating the upfront cost of buying their first house and are being urged to budget carefully in order to boost their chances of securing a home.
Yorkshire Building Society has published the results of research which discovered first-time buyers in just two of regions of the UK were planning to save enough money to get onto the property ladder.
The rest, it discovered, were falling short of the amount they would need for their upfront purchase budget by thousands of pounds.
London and the South East
In London the gap between intentions to save and reality was the biggest. Here almost £70,000 was unaccounted for by potential first-time buyers while they were saving for their first property.
Homeowners buying their first property in the capital paid, on average, nearly £415,000 in the area last year with an average deposit of £118,531. However, Yorkshire’s research showed potential first-time buyers intended to save less than half of this – having £49,000.
Another area with a deposit discrepancy was the South East, where the average first-time buyer house was £276,930 and the average deposit was 22%, meaning would-be homeowners would need nearly £61,000 to secure a home. But Yorkshire discovered first-time buyers in the region were intending to save just under £43,000 to purchase a property – a shortfall of more than £18,000.
In fact, in all regions of the country but two buyers were underestimating the amount they needed to put down for a deposit.
Northern regions
Yorkshire and The Humber and Scotland were the only two places where homeowners intended to save enough money to purchase their first property.
And, in fact, the research revealed they could even be overestimating the upfront costs. In Scotland first-time buyers paid £137,714 and put down a £24,000 deposit but this is £1,500 less than would-be homeowners were intending to save.
Take time to do the maths
Chris Irwin, senior mortgage manager at Yorkshire Building Society, said first-time buyers in the majority of regions of the UK could do more to manage their financial expectations of purchasing a house – but it was important for everyone to budget.
He added: “I’d encourage anyone with a dream of homeownership to really take time upfront to do the maths and work out how much they will realistically need to take that first step on the property ladder, including any up-front fees on top of a deposit.
“When you’ve got a more realistic figure, it’s easier then to review your savings habits and work out what you’re able to save over what period of time, to achieve your required goal.
“Breaking it down in this way, early on in the home-buying journey could really help first-time buyers.”
