First Time Buyers Take Years to Save a Deposit

First time buyers are struggling to save a deposit to buy a property and for almost have of them it will take ten years to do so.

According to Post Office Mortgages, some 47% of prospective first time buyers expect it will take ten years or more to save a deposit for their first property.

Those living in the South East and South West have most difficulty with raising a deposit

The age at which a homebuyer expects to but a property has steadily risen since the 1960s and now stands at 35 on average age a prospective homebuyer expects to buy their first home, rising steadily since the 1960s when the average was just 24 years old.

The biggest barrier first time buyers face is finding it hard to raise a deposit unless their circumstances change, such as getting a better paid job or inheriting some money, and not being able to afford the mortgage repayments.

Interestingly enough though, those who decide to rent a property rather than buy, on average currently pay £876 more a year than the average homeowner with mortgage payments.

Almost a fifth of first time buyers believe that a re-introduction of no stamp duty for them would help them get a foot on the property ladder.

Other triggers for taking the step to buy a home include hitting important milestones in life such as getting married or starting a family.

John Willcock, Head of Post Office Mortgages, said; “The sheer size of the deposit is the most daunting thing for would-be first time buyers, but it appears to be worth the wait if it works out cheaper than renting.

“However, there are a number of competitive mortgage options for people keen to buy their own home, and prospective buyers may not have to wait until they’re 35 to get a foot on the ladder.

“In fact, since the beginning of the year, 27 per cent of Post Office mortgage customers have been first time buyers compared to industry figures of 18 per cent, and on average Post Office mortgage customers are just 31 years old; suggesting some people may be able to afford to buy a home sooner than they think.

“In addition the Post Office also offers a range of products, which only require a ten per cent deposit and our recently launched Mortgage Specialists are able to help people through the process of choosing a mortgage, discussing each individuals needs and answering questions to help customers make an informed decision.”

MoneyHighStreet comments: “Saving for a deposit can clearly take a long time. To help you save money, set a budget and try and stick to it. Don’t be afraid to revise the budget if need be, particularly if your circumstances change.

“Put money you save away into a savings account that pays the best interest possible. Consider whether you need access to this money or whether you can ‘lock’ it away for a period of time to get the best rate.

“When you do get to buy a property and need to take out a mortgage, do be careful to check the interest rate and work out your total costs, based on the monthly repayments and the loan period, including any upfront fees, to give you the total amount you will be paying.

“The better deals will still invariably go to those who can provide a bigger deposit, or in other words need a smaller loan to value (LTV). Equally there is a premium to pay for avoiding the upfront fees – lenders will look to recoup costs somehow.

“Check your figures and of course opt for the best deal that covers your particular circumstances. It will pay you to take your time to get it right.”

To find out more about Post Office Mortgages visit www.postoffice.co.uk/ or call 0800 077 8033.