How much more first-time buyers need to save to buy a house revealed – and Londoners are £70k short
THE majority of first-time buyers underestimate how much they need to save to get on the property ladder, according to new research.
Londoners need an average deposit of £118,531 to get on the ladder but most only expect to save £48,947 - leaving a gap of £69,584, according to Yorkshire Building society.
While those in South East England and East of England are short of £18,044 and £19,187 respectively.
Only potential home buyers in Yorkshire and Scotland are saving more than the average deposit for their area requires.
The depressing report is based on the average house price for first-time buyers in each region, compared with the corresponding average deposit.
The building society then asked almost 1,000 first-time buyers how much they were saving for their first property.
While the size of respondents is small, the building society claims it reveals the gap between current savings and the amount needed to actually get on the property ladder.
Chris Irwin, senior mortgage manager at Yorkshire Building Society, said: “While our research indicates first-time buyers in the majority of regions across the UK could do more to manage their financial expectations of buying a house, it serves as a reminder to potential homeowners of the importance of budgeting.
“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 and 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.”
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Research last June found that single first-time buyers need over a decade to save up for a deposit.
In May, we revealed how to get the best mortgage if you're a first-time buyer - and all you need is a 5 per cent deposit.
How to save up a deposit if you're a first-time buyer
At present you'll need at least 5 per cent of the property's value to get a mortgage.
The bigger the deposit you can save, the better.
Firstly, take a look at the area you want to buy in using sites like Zoopla and Rightmove.
Use the average price of the size home you want to buy.
Then work out how much of a deposit you'd like to save.
Once you've got this figure you can deduct how much you already have in savings.
Then work out a plan for how much you can save each month.
Don't forget to factor in any property price inflation for the area you're buying in, plus any interest on your savings.
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What help is out there for first-time buyers?
GETTING on the property ladder can feel like a grim task but there are schemes out there to help first-time buyers own a home.
Help to Buy ISA - It's a tax-free savings account where for every £200 you save, the government will add an extra £50. But there's a maximum limit of £3,000 which is paid to your solicitor when you move.
Help to Buy equity loan - The government will lend you up to 20 per cent of the home's value - or 40 per cent in London - after you've put down a five per cent deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.
Lifetime ISA - Another government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards your first home. You can save up to £4,000 a year and the government will add 25 per cent on top.
Shared ownership - Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25 to 75 per cent of the property but you're restricted to specific ones.
"First dibs" in London - London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.
Starter Home Initiative - A government scheme that will see 200,000 new-build homes in England to be sold to first-time buyers with a 20 per cent discount by 2020. To receive updates on the progress of these homes you can register your interest .
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