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Average first-time buyer deposit reaches £36,000

First-time home buyers in London pay twice UK average

52% of first-time buyers receive financial help from a parent or other family member

More than half of first-time home buyers get financial help from a family member to buy their first property, according to research from Which? Mortgage Advisers.

The research found that first-time buyers across the UK saved an average deposit of 17% of the purchase price – equivalent to £36,000, based on the average first-time buyer property price of £213,000*.

One in three UK first-time buyers saved for between two and five years for a deposit, according to the June 2015 survey. More than half (52%) had financial support from a parent or other family member to buy their home.

  • A third (33%) of the survey’s respondents were gifted money towards their purchase; 
  • A quarter (26%) were loaned money towards their purchase by a family member; 
  • Almost one in 10 (9%) used a family member’s savings as security against their mortgage; 
  • Around 8% co-bought their home with a family member;
  • Family members acted as guarantors on 6% of first-time buyers’ mortgages.

If you’re saving a mortgage deposit for your first home, it’s worth talking to an expert for advice on how to save and what to aim for. The team at Which? Mortgage Advisers can guide you through the whole process right up until you get the keys to your new home.

You can call our independent, expert advisers for a free consultation on 0808 252 7987.

First-time home buyers in London struggling to keep pace

Those buying their first home in London had to save an average deposit of 18.7% of the purchase price, equivalent to £76,000*, which is more than double the UK average. 

Over a quarter (27%) of London-based first-time buyers saved for over five years to raise their deposit, whereas only 18% in the rest of the UK needed more than five years to save.

David Blake from Which? Mortgage Advisers said: ‘Taking your first step onto the property ladder can be a daunting and expensive experience, particularly in a competitive market. 

‘It’s important to make a savings plan to make sure you are in the best possible position when you come to put in an offer. Talk to an independent mortgage adviser at an early stage to understand how much you’re likely to be able to borrow and how much you’ll need to save as a deposit for your first home.’

Find out more: buying your first home a step-by-step guide created by Which? Mortgage Advisers

How to buy your first home: six top tips

Which? Mortgage Advisers, which has helped more than 3,000 first-time buyers get their feet on the property ladder, has the following advice for those trying to buy their first home:

1. Get a savings plan in place 

Getting a deposit together can be hard work, but it pays to save as much as possible. The larger your deposit, the better mortgage rates you’ll be offered.

2. Consider a Help to Buy Isa 

The recently launched Help to Buy Isa will provide a 25% government ‘top-up’ to your savings at the point of buying – up to a maximum bonus of £3,000.

3. Talk to your family 

There are a number of mortgages that allow you to get help from your family:

  • Guarantor mortgages, where a family member agrees to make the repayments if you can’t, reduces risk in the eyes of lenders
  • Joint mortgages allow you to buy with a relative
  • Family offset mortgages will let you use parents’ savings to help reduce your mortgage costs

For more information, see our guide on how parents can help first-time buyers.

4. Consider shared ownership or shared equity

Shared ownership schemes allow you to buy a proportion of the property and pay rent on the remainder. Shared equity schemes allow you to buy the whole property, but you take out a loan to fund the deposit.

5. Explore other government schemes 

Help to Buy and New Buy work by either offering you an interest-free equity loan to buy a new-build property or by the government part-guaranteeing a mortgage loan to make it less risky for lenders to offer you a mortgage. They are available to buyers with deposits of between 5% and 20%.

It was announced in this year’s Autumn Statement that Help to Buy Equity Loans will be increased from 20% to 40% for first-time buyers in Greater London from next year. For more information, see London Help to Buy.

6. Factor in additional costs 

You’ll need to budget for costs including stamp duty, mortgage arrangement fees, solicitors’ fees and surveys. You can work out how much money you’ll need in our guide on the cost of buying a house.

More on this…

*Average property prices taken from ONS data published in November 2015 and based on June 2015.

Your home may be repossessed if you do not keep up payments on your mortgage.

Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.

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