The average increase was an additional £22,849, bringing the deposit size up to £62,572 (an average of 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.
The lender has compiled their top tips to help those looking to achieve their home buying dreams.
1: Don’t just put aside loose change, try and save a set amount each month – Rather than putting aside only the money you have leftover at the end of the month, try to save a set amount regularly and consistently, ideally at the beginning of the month. It’s also worth looking at the typical property prices in the areas you’re interested in buying. This will help give you an idea of how much of a deposit you’ll need to save and estimate a timeline to reach this goal.
2: Shop around for savings products – The big high street banks can often offer low rates for building savings funds; ensure you shop around for the best rates and products that suit your home buying timeline. While small differences in rates may seem slight, the differences can snowball through compound interest and really add up over time, making it easier to reach your goal.
3: Assess your living situation – Renting can take a big chunk of your monthly income. If you live alone, consider renting with friends or living in a house-share as this will typically be cheaper than renting a one-bedroom property. It will also help reduce monthly utility bills, in turn helping you to save more each month. For those who are able to move in with parents or family temporarily, this could be another alternative to renting altogether.
4: Take advantage of help for first time buyers – The difficulty faced by first-time buyers attempting to get their foot on the housing ladder is widely recognised. Over the past few years, various Government schemes have been introduced to help first-time buyers achieve their homebuying goals. For example, if you’re open to purchasing a new build property, consider utilising the Government’s Help to Buy Equity Loan Scheme ahead of the deadline in March 2023.
5: Cut down on unnecessary spending – We all deserve a treat now and again, but unnecessary spending habits may be sabotaging your savings. Small changes over time, such as making your own lunch a few days a week, can add up over time. It’s also worth reviewing your direct debits and bank statements to identify any automated payments you may have signed up for, which you do not make use of anymore.
6: Review your savings habits regularly – If you’re having difficulty meeting your target amount, reduce your monthly contributions to make them more manageable. If you receive a pay rise, a financial gift or find your monthly outgoings are reduced, consider increasing these contributions to reach your homebuying goal sooner.
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.”
