New research has revealed that first-time buyers need to save for 10 years before being able to buy their first home.
If a single would-be homeowner can’t rely on help from the Bank Of Mum & Dad, research by Hamptons estate agents reveals it could take them a whole decade to save enough for a 15% deposit if they earn an average salary and can afford to save 22% of it.
But a decade is only an average figure. There are wide variations across the country.
Living in the North East of England, it could take as little as 6 years and 6 months to save the deposit, but for anyone living in London the timescale soars to 15 years and 9 months.
But the report does contain some good news. Affordability is improving because of slower house price growth and rising wages.
The twin factors have reduced the average waiting time by 9 months in the last 2 years. Saving as a couple is also much quicker – half the time of one person saving alone.
Mortgages available with just a 5% deposit could be an option, but there is the downside of higher repayment rates.
Advice on saving
Financial information company Moneyfacts has produced a 6 point plan on how to achieve your savings target:
Budget – Work out where cutbacks can be made on your current spending pattern, but be realistic as you still have to live your life without feeling miserable.
Set your target – You need to know what you’re aiming for so research house prices in the area where you want to live to get a rough idea of how much a month you need to be saving. But bear in mind that prices are likely to rise before you’re ready to buy and you must factor in other costs like legal fees and moving costs.
Find the best savings account – If you want to make deposits when you can an easy access account could be the one for you. But if you can commit to regular deposits then a regular savings account might be better. Other types of account are also available, so do your research.
Use government support – Using either a Help To Buy ISA or a Lifetime ISA will bring you a 25% government bonus on your savings, which is a massive boost. More information is available here.
Research types of mortgage and rates – You may not be buying in the short term, but it doesn’t harm to know what is available on the mortgage market. There are lots of different products and you need to find the one that’s right for you.
Be patient – Saving these sorts of sums isn’t an instant thing. Keep your goal in sight and you’ll get there in the end.