Top tips to save a deposit for your first home
First-time buyers that have bought in the last 18 months have been hit with rising purchase costs, totalling tens of thousands of pounds extra to get on the ladder, said Aldermore.
The lender’s research revealed that over half (58%) of first-time buyers needed to raise a larger deposit than they had originally planned for, due to the impact of the Covid-19 pandemic and rising house prices.
The average increase was a whopping £22,849, bringing the average deposit size up to £62,572 (18.6% of the property value).
It took first-time buyers who bought since the beginning of the pandemic an average of nearly five years (4.6 years) to save up enough.
Jon Cooper, head of mortgage distribution at Aldermore, said: “Becoming a homeowner is a wonderful step forward in a person’s life but our research shows the persistent effects of the pandemic are causing high levels of financial challenges in the journey. While costs and complicated processes may feel daunting, we’ve found first time buyers are glad they did it, with 78% saying the stress was worth it to find a home.
“I would advise would-be buyers to plan carefully to ensure they are prepared for the range of costs involved and to seek a broker who can be a great help in cutting through the jargon and guiding you through the process.”
How to save your deposit faster
Aldermore has also published its top tips for those saving a deposit for their first home:
1. Don’t just put aside loose change, try to save a set amount each month.
2. Look at the typical property prices in the areas in which you’re interested in buying. This will give you an idea of how much of a deposit you’ll need to save.
3. Shop around for savings products – while small differences in rates may seem slight, the differences can snowball through compound interest, making it easier to reach your goal.
4. Assess your living situation – Renting can take a big chunk of your monthly income. If you live alone, consider renting with friends, living in a houseshare or moving in with parents as this will typically be cheaper.
5. Take advantage of help for first-time buyers. Over the past few years, various Government schemes have been introduced to help first-time buyers achieve their homebuying goals, such as the Government’s Help to Buy Equity Loan Scheme.
6. Cut down on unnecessary spending – We all deserve a treat now and again, but unnecessary spending habits may be sabotaging your savings. Small changes add up over time.
7. Review your savings habits regularly – If you’re having difficulty meeting your target amount, reduce your monthly contributions to make it more manageable. If you receive a pay rise, consider increasing these contributions to reach your homebuying goal sooner.