There's nothing better than the thought of being able to take that first step on the housing ladder, yet unfortunately, it could take longer for the dream to become a reality than many people think – particularly for those who can't rely on the Bank of Mum and Dad.
According to research from estate agents Hamptons International, it could take a typical first-time buyer an average of 10 years and three months to save enough for a 15% deposit without family support, which means single buyers who start saving now will have to wait until 2029 to turn the keys in their very first lock. This is assuming they earn an average salary and are able to dedicate 22% of that towards saving; if not, it could take even longer.
There are stark variations depending on where you're looking to buy, however. In the North East, for example, it could take an average of six years and six months for a single person to afford a 15% deposit, while those looking to buy in London could find themselves saving for the next 15 years and nine months.
Yet there is some good news. Affordability is actually improving, for a start: two years ago it would have taken 10 years and nine months to save a deposit, with slowing house price growth and rising wages making it marginally easier for first-time buyers to reach their goal. Those who are able to buy as a couple will also find it much quicker to save, with it taking an average of four years and nine months – half the time it could take a single person.
Then there's the fact that you don't technically need to save 15% to be able to take the first step on the housing ladder. There are plenty of mortgages available to those with just a 5% deposit – you'll have to pay higher rates for the privilege, but it could be an option for those who can't face saving for a decade.
How to save for your first home
If you haven't been put off by the time it could take to buy your first home, you'll want some tips on how to go about it. Well, read on!
- Budget. The first step is taking a close look at your budget so you can see where cutbacks can be made. Things like unused gym memberships can be instantly cut back on and you may want to restrict the amount you spend on luxuries, but be realistic – you still need to have a life! Work out how much you think you can afford to save each month – without leaving you miserable for the next few years – and commit to setting it aside.
- Know how much you'll need to save. As well as knowing how much you can afford to save, you'll also want to know how much you need to save to reach your goal. Do a bit of research into house prices in the area you want to buy so you've got a rough idea of the amount of deposit you'll need, but bear in mind that prices can change over the years, so be prepared to re-evaluate things going forwards. Make sure to factor in things like legal fees and moving costs too.
- Find the best savings account. One of the most important things is finding the right savings account to squirrel away your house fund. If you're looking to save on a regular basis, an easy access account (making sure it's one that allows further additions at will) or a regular savings account (which will ask you to set aside a certain amount each month) could be ideal. But there are some other savings accounts you may like to consider, too…
- Make the most of Government support. If you want to reach your goal quicker, what could be better than a 25% bonus from the Government? There are two Government-backed savings accounts specifically designed for those saving for their first home – the Help to Buy ISA and Lifetime ISA. Both allow you to save up to a certain amount each year and will give you a 25% bonus on top of everything you save, which could go a long way to helping you build up a deposit. Find out which one you may want to consider here.
- Familiarise yourself with mortgage rates. You may not be close to buying your first home just yet, but it doesn't hurt to be prepared. It's worth taking a look at the mortgage market every now and then to see the best rates available, as that way, you'll know whether a 5% deposit will be affordable or whether you should try to save more for the sake of a lower rate.
- Be patient! Saving a deposit for your first home isn't something that can be achieved overnight, so make sure to be patient – you'll get there in the end!