Buy To Let
Londoners underestimate deposits for a home by £20,000
First time buyers are seriously underestimating how much they will need to save and for how long, to make-up enough for a deposit on their first homes.
Saving for your first home is now eight times harder than it was in the mid 90’s, according to a new report by Barclays.
The average first timer also underestimates the amount of money they’ll need for a deposit by £5,000.
A typical Brit buying their first home believes a deposit of £25,564 will be sufficient, when in fact the UK average is £31,059. First time buyers in London underestimate the size of their by more than £20,000 and the length of time it will take to save a deposit by almost three and a half years.
According to Barclays, the actual deposit required in London is £70,000 while first time buyers believe they need just £47,728 creating a deposit gap of £22,272.
It now takes nearly eleven years for a Londoner to save their deposit compared to less than a year in 1995.
Andy Gray, managing director of mortgages Barclays, said: “We know it’s tough for people to get on the property ladder, that’s why we’ve been actively listening to home buying dilemmas such as being stuck renting for the long term or moving back to family to save for a deposit. Whilst family want to help many can’t afford to give away lump sums.”
Almost a third will need help from the ‘bank of mum and dad’ to get on to the property ladder.
Two in five of these aspiring homeowners view this money as a ‘gift’ which they will not need to pay back, leaving the bank of mum and dad significantly depleted.
However, Barclays highlight that although saving for a dream first home is difficult, conditions have improved since the financial crisis of 2009 when it took an average of 10 years to save a deposit.
