First-time Buyers Urged To Reconsider Savings Targets

The average first time buyer is falling more than 5,000 short of their planned deposit, new figures have suggested.

Would be buyers are spending two years saving towards a ten per cent deposit before applying for a mortgage, but are still not managing to raise the necessary funds.

While aiming to accumulate more than 11,000 over a two year time period, the average first time buyer is saving just 270 a month towards their first home, which is leaving them 5,140 short of the desired total, research by Alliance and Leicester has recently found.

There is a clear mismatch between how much and for how long first-time buyers are willing to save and their ideal target deposit to buy their first property, said Richard Taylor, head of mortgages at Alliance & Leicester.

With the average first time buyer house priced at just over 135,000, the deposit of over 11,000 that first time buyers want equates to about eight per cent which would give them a sizeable slice of equity in their first home.

However, Alliance & Leicester recommends that would be buyers aim for a less ambitious target, claiming that there are plenty of good deals available for buyers with just a five per cent deposit.

It is worth noting that while first time buyers seem to have an unrealistic expectation of just how much they need to save in order to reach their ideal deposit, a decent deposit is not completely out of reach, Mr Taylor said.

With a five per cent deposit on a typical starter salary standing at 6,787, many first time buyers could manage to gather sufficient funds at their current saving level.

The bank also recommends that people cut back on socialising and leisure activities in order to bolster their funds, with would be buyers spending more than 1,500 a year on leisure activities.

Adfero Ltd

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TML Mortgages offer bad credit remortgages to UK homeowners with credit problems.

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