Average first-time buyer deposit to rise to £81k within 10 years – here’s how to get help
THE average deposit needed by first time buyers to get on the property ladder is expected to rise to £81,468 over the next 10 years.
By 2027, first time buyers could see a whopping 60 per cent hike - an extra staggering £30,000 - to the amount needed for the security payment, warns mortgage brokers L&C Mortgages.
Today the average deposit is £51,821 which could rise to £65,930 over the next five years, and then to more than £80,000 over the next decade.
By 2027, first time buyers may need to put down 28 per cent of a property’s value, which could amount to a deposit of £81,468, up by £29,647 from the current average deposit.
And with house prices rising at the fastest rate since January, it's not hard to believe the data.
The research looked at some of the largest cities in the UK and found some that By 2027, the deposit required for Londoners is expected to triple to an eye-watering £245,000.
Meanwhile, house hunters in Brighton and Hove will have to put down an extra 62 per cent to secure a mortgage.
Dwellers in Bristol will need to find an extra £34,000 as deposits are expected to rise to more than £74,000.
Those hoping to settle in Belfast are likely to see the smallest increase but the extra 41 per cent will still see their deposits rise to £41,755 by 2027.
How to get help buying a house
THERE are several government schemes available to help you get on the housing ladder.
- Help to Buy loan: This scheme is for those who have a 5 per cent deposit, and is only available on new-build properties that are worth less than £600,000. The government lends you up to 20 per cent of the property value (interest-free for the first five years) which gives you access to cheaper mortgages. You will need to pay this back at the end of the mortgage or when you sell.
- Starter Homes: First-time buyers under the age of 40 can access this new scheme. You’ll get a 20 per cent discount on the market value of the property (new-build only) but you cannot sell or let the property for five years after you buy it.
- Shared ownership: This scheme is available to non-homeowners who earn £80,000 a year or less (£90,000 in London). People can buy a share of a home from a housing association and continue to rent the remainder. Buyers will need a ten per cent deposit as well as money to cover stamp duty and other fees. You’ll also need to find a mortgage lender that is willing to lend on shared ownership properties
"First-time buyers could be forgiven for giving up hope on owning their first home," said David Hollingworth from L&C.
"There is some stark variation between cities but the fact that London deposits could be almost hitting a quarter of a million pounds by 2027 is alarming.
PROPERTY LADDER How to find the best mortgage if you’re a first-time buyer – and all you need is a 5 per cent deposit
"It makes sense for first-time buyers to try and raise as big a deposit as possible but that is very much easier said than done in today’s current climate."
Struggling to save for up to 10 years for a deposit is just one of the challenges facing first-time buyers today.
More on UK house prices
Buyers are still heavily reliant on support from the “bank of mum and dad” when it comes to purchasing their first home, with 29 per cent of buyers getting cash contributions from parents.
But that's not an option for everyone. Help to Buy loans, Starter Homes and shared ownership are some of the options people dreaming of owning their own home can turn to for help.
The Chancellor Phillip Hammond's decision to scrap Stamp Duty for first time buyers was supposed to offer hope to those want to get on the property ladder, but the Office for Budget Responsibility warned that it would push up house prices by 0.3 per cent.
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