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Which? reveals the drastic ways that first-time buyers save for a deposit

Moving back in with parents and selling belongings both popular strategies

Which? reveals the drastic ways that first-time buyers save for a deposit

As the cost of buying a property in the UK soars, aspiring homeowners are taking drastic measures to save for a deposit.

Around 22% of first-time buyers moved back into their parents’ house to save up a big enough deposit, a survey from Which? Mortgage Advisers showed – while cutting back on spending, working more hours and even selling off belongings were also popular tactics.

Below, we explain how first-time buyers are getting on the property ladder and the steps you can take if you’re trying to save for a deposit of your own.

 


First-time buyers spend years saving

When we surveyed over 700 first-time buyers in December 2017, we found that nearly half (46%) were putting down a deposit of 10%. If you take the current Office for National Statistics (ONS) average property price of £237,794, this equates to £23,000 in cash – even without factoring in the other costs of buying a house.

On average, first-time buyers spend between three and four years actively building up a deposit, our survey showed. For many, however, the journey is much longer – a quarter spend more than five years saving.

The secret to saving a deposit

The savings needed to buy a home are immense, so how are people managing it? The Which? Mortgage Advisers survey found that first-time buyers were prepared to significantly change their lifestyle to boost their savings.

Cutting back on spending was the most popular option, with 41% of aspiring buyers going out less often and a further 41% cutting out non-essentials. Holidays were also curtailed, with 38% spending less on travel.

Some people were creative with their fundraising, with 19% selling belongings, while a financially savvy 24% shopped around for the best banking deals.

But first-time buyers also took more extreme measures to save – 37% worked overtime or longer hours, while 22% moved in with family to save on rental payments.

First-time buyers helped by family

While 62% of respondents saved every month to be able to afford a deposit, savings alone weren’t enough for many first-time buyers.

One in three (31%) people were helped along by inheriting money, while a similar number (29%) received help from a relative or friend.

If your parents want to help you buy a home but can’t give you cash towards your deposit, there are other options.

With a guarantor mortgage, the parent offers their own home as security against their child’s loan, allowing them to borrow up to 100% of the property value.

A family offset mortgage, meanwhile, allows parents to put their savings in an account to offset against the child’s mortgage, with the money returned once the property is paid off.

Buy a property sooner rather than later

If you’re struggling to save up a deposit, there is help available.

David Blake, principal mortgage adviser at Which? Mortgage Advisers, says: ‘For many, the prospect of saving a deposit for a first home can be daunting, unrealistic and even downright depressing.

‘However, there are various options out there for first-time buyers, from Help to Buy Isas to equity loans, and even shared ownership. Consider speaking to an independent expert who can offer tailored advice.’

If you’re looking to buy a property, options to consider include:

To find out how soon you’ll be ready to buy in your chosen area, check out our mortgage deposit affordability calculator:


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