If you're currently renting, do you have aspirations to own your own home one day? If so, how long do you think you'll have to wait? Unfortunately, it could be some time: the high cost of accommodation is taking a toll on renters' finances and is seriously impacting their ability to save, and research has found that almost half of prospective homeowners expect to remain as tenants for some time.
A distant dream
The research, from the latest Post Office Money Mortgages survey, found that 45% of those questioned fear that they'll be shut out of the property market for the foreseeable future. Some are even more downbeat, with 28% claiming that they'll never be able to afford a deposit unless their circumstances change dramatically, and even those who can take the plunge may not find it easy, with 17% citing mortgage repayments as a key concern.
This coincides with research from Clydesdale and Yorkshire Banks, which found that renters are finding it increasingly difficult to save the deposit for a home. This perhaps explains why almost 30% of those who are currently renting believe that it will take more than four years to save a large enough deposit to buy their own home, while the Post Office survey is even more pessimistic, with UK renters believing that it'll take them an average of eight-and-a-half years to save.
At the same time, the average age that they think they'll be able to achieve their home-owning goal has risen to 36, up from 35 in 2014, with rising house prices and the cost of rent having a significant impact on would-be buyers' affordability. Unsurprisingly, raising the deposit is a key barrier, with only 31% saying that they'll be able to save the full amount by themselves.
Given how expensive rents are these days, not to mention how quickly house prices are rising – and therefore how high the deposit will need to be – it's little wonder. The latest Buy-to-Let Index from Your Move and Reeds Rains shows that average rents in England and Wales stood at £803 per month in August, which despite being 0.1% lower on a monthly basis, is still 5.5% higher year-on-year. Given the kind of outgoings renters face, is it any surprise that saving for a deposit is so difficult?
How will you reach your goal?
Being able to raise a deposit may be difficult, but it doesn't have to be impossible. There are several things you could try to speed up the process, such as finding the right savings account to maximise your returns, and you'll of course want to keep an incredibly close eye on your budget so you can save as much as possible.
However, there are other things you may want to consider, too. What about moving back in with your parents? It may not be the ideal solution for many, but it could seriously pay off. A lack of rent (or even a lower rent) could make all the difference, and in fact, the Post Office survey found that half of those who moved back in with their parents are planning to accumulate the necessary funds within two years, and all of them expect to reach their goal within four.
For some, moving back to the parental nest is the only sensible solution, but this may not be the only form of financial support that parents can give. Could you ask them for help towards the deposit, for example? This is what 13% of respondents plan to do, and a further 19% would ask partners to help cover the cost. You may want to look into the Government's Help to Buy scheme, too – 25% of would-be buyers are planning to go down this route, and considering you'll only need a 5% deposit with this kind of mortgage, it could be a great way to reduce your deposit requirement.
Whether you opt for Help to Buy or not, it's important to know the kind of mortgages that are out there, if only to have an idea of what your potential repayments could be. This could allow you to budget accordingly, because you'll need to prove to lenders that you can comfortably afford the mortgage, both now and when rates rise. Start the process by checking out the best mortgages currently available and then start saving as hard as you can, and hopefully, your dream won't be out of reach for long.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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