The average single first-time buyer needs to save for a decade before they are able to afford a 15% mortgage deposit, based on new information.
Londoners face a level longer wait of Fifteen years before they've enough money to try to get an 85% mortgage, Hamptons International reports.
Which? explains the findings, speaks to a young couple trying to buy a house amid an uncertain economic climate and advises on schemes which can help first-timers get on the ladder sooner.
Mortgage deposit-saving process getting shorter
In the present market, you'd need a minimum of a 5% deposit to obtain a mortgage. However, based on UK Finance the typical first-time buyer deposit is 15%, which is why Hamptons International centered on savers reaching this amount.
The estate agency found that the typical single first-time buyer needs 10 years and three months in order to save for a 15% deposit in Britain.
That means that if they started saving now they wouldn’t be able to buy a home until 2029.
A single person buying working in london would want a lot longer in order to save a deposit – 15 years and nine months, according to Hamptons research.
Savers might take some comfort from the proven fact that time to save has fallen slightly in all but two regions of Britain over the last 2 yrs. Time it absorbed the North East and the North West stayed the same.
The map below shows just how long it requires first-time buyers to save for a 15% deposit across England and Wales.
Couples can get an 85% mortgage in less than five years
Unsurprisingly, those buying having a partner are able to save a 15% deposit much more quickly compared to those buying alone.
Hamptons states that the typical couple would need to save for four years and nine months to boost a 15% deposit on their own first home, that is around 50 % of time it takes an individual.
It was 3 months quicker for any full-time working couple in England and Wales in order to save for a home at the end of 2022 in contrast to 2022.
The chart below shows the number of years it requires couples in order to save a 15% deposit in Britain on average compared with London for each year since 2000.
How did Hamptons settle your differences?
Hamptons International assumed that first-time buyers can help to save 22% of the income towards a first deposit once they have taken care of all their essential bills, tax, National Insurance and living costs.
It used full-time earnings in the Annual Survey of Hours and Earnings (ASHE), adjusted towards the 20 to 29-year-old age group.
Case study: ‘It’s surprising how much lb10 per month adds up’
Legal adviser Thomas Holloway, 24, is aiming to buy a house together with his partner Jess Norton, 25, in a village near Bristol where they are currently renting.
Thomas continues to be saving since he was 16 and has were able to develop several thousand pounds with a stock and shares Isa.
Now he saves money in his current account, but admits the down-side of the may be the money could be a little too accessible.
He tells us: ‘Saving for any deposit has affected my lifestyle for the reason that I've began to reduce things such as subscriptions – for example I wasn’t using Spotify enough and it's surprising how much lb10 per month accumulates.
‘It is also affected my decision-making processes. We always shop around for leisure activities and make sure we visit the cheapest cinema.’
His partner, self-employed dentist Jess, is saving any leftover money from a fund accustomed to pay tax.
The couple have set an ambitious target of raising lb30,000 (lb15,000 each) to pay for a first deposit and legal costs.
They are aiming to buy a house costing between lb250,000 and lb300,000 having a 90% loan-to-value mortgage to obtain ‘better interest rates’.
‘We could possibly already get a 95% mortgage, but we took some mortgage advice from Which? Mortgage Advisers who told us that we'd maintain a better budget if we waited a couple of years,’ says Tom.
Worried about Brexit impact
Brexit has also made Thomas cautious about rushing into buying a home.
‘We’ll now hold off until the country knows what is happening with Brexit,’ he added.
‘We have savings and my father could possibly help, so if we really wanted to buy now we might have the ability to. But that might be rushed and we're greatly avoiding that just just in case.
‘Had Brexit not occurred we'd seriously be considering buying in the next six to Twelve months, but I am not likely to risk my dad's money to purchase a house for [the economy] to break apart.’
Homeownership brings stability
Despite the difficulties, Thomas is certain the advantages of having a house will be worthwhile.
He said: ‘My budget is dictated by my job and income whereas basically were built with a home I'd possess a little more stability behind me. My aim is that any spare money I've will pay from the mortgage.
‘My main reasons for attempting to own a home are stability for your loved ones, because that is the end game and we’re starting to plan a life down here in Bristol. Plus the freedom to complete what we want with the property, pets, renovations and extensions.
‘We're looking forward to finding a stable market and really jumping in it.’
How to save for any deposit
There are lots of ways you can save money for any deposit including by reducing your bills, cutting down on everyday spending, using loyalty and cashback charge cards, increasing your income and taking advantage of a regular saving app.
You may want to save into a Help to Buy Isa or lifetime Isa, which both provide a government bonus as high as 25% in your savings when you buy your first property.
You may use the Which? mortgage deposit calculator to see just how much you’ll have to save in your town, so when you’re likely to reach that quantity.
How much deposit do you absolutely need?
Unless you’re capable of getting a 100% guarantor mortgage (which are unusual), you’ll need to save a minimum of a 5% deposit.
There are however a lot of reasons to try to spend less than 5%. Investing in 10% or more will open you up to cheaper home loan repayments, better mortgage deals and an improved chance of being accepted whenever you apply.
It also causes it to be less likely that you’ll fall into negative equity, which could happen if house prices fall and you owe more about your mortgage than your house is worth.
First-time buyer schemes
If you’re really struggling to save up a big enough deposit, you could consider the following options:
