First-time buyers need to save long and hard
The average first-time buyer deposit in Yorkshire is Â£19,462, so saving creatively is crucial, says Sharon Dale
New figures from the Halifax show that the average age of the first-time buyer in Yorkshire has crept up from 27 in 1983 to 29 today.
It doesn’t sound so bad compared to the average age in London, which is now 32, but there are still enormous hurdles for those trying to scramble onto the property ladder.
Raising a deposit and securing a mortgage are the biggest issues. The average first-time deposit in the UK has doubled over the last ten years and now stands at £32,321 with a four-fold increase to £100,000 in London, according to the latest Halifax First-Time Buyer Review. In Yorkshire, it is £19,462, which is an average 14 per cent of the property purchase price and an enormous sum to save given that the average salary in the region is £24,500.
The average first-time buyer house price in Yorkshire has risen to £135,719, while the UK average is over £200,000 and stands at a record £400,000 in London. This increase has led to a growing trend towards longer mortgage terms. In 2006 only 36 per cent of first-time mortgages were over 25 years. Now, 60 per cent have breached that threshold with over a quarter of buyers opting for a 30 to 35-year payback period.
The good news is that having reached an all-time low of 192,300 during the credit crunch in 2008, the number of homebuyers getting on to the first rung of the property ladder has grown by 75 per cent to 335,750 in 2016. However, numbers remain 17 per cent below the 402,800 in 2006.
The statistics are proof that today’s first-timers have to be both creative if they want to own a home. Andrew Frost, 26, who works in marketing, saved for a mortgage deposit for almost two years and by February last year he had the keys to a three-bedroom terraced house. The property cost £92,000 and he put down the ten per cent deposit of £9,200 on a joint mortgage with his partner.
“It was my ambition to own a house by the time I was 25. I got a job in 2013 after I finished university and then I lived at home until I saved enough for a deposit on a house. I am lucky that my parents let me live rent free, which obviously helped,” he says.“I put money into a separate savings account each month and still had enough to go out and enjoy myself. I just didn’t buy any unnecessary luxuries like a flash car and whenever I wanted to spend I had to think whether it was something I really needed.”
Andrew’s mortgage is £470 a month, which is cheaper than the £495 a month rent for similar properties in the area. “I really didn’t want to rent as it’s a waste of money,” says Andrew, who has made improvements to his home and is already thinking about taking the second step on the property ladder.
Here are some more first-time buyer tips:
*Get a Help to Buy ISA. This is free money. For every £200 saved in the ISA, the government adds a bonus of £50. The maximum bonus on savings is £3,000. If there are two of you buying together, you are both entitled to a Help to Buy ISA. To qualify for the 25 per cent top-up, you need to have saved at least £1,600.
*Creative saving. Do you need to eat out so much? Can you take a sandwich and a coffee to work instead? If you spend £5 on lunch five days a week – it adds up to about £1,000 a year. Lots of little savings like this add up but don’t let them languish in your current account. Take them out when you get paid and put them in the aforementioned ISA. Rent is probably your biggest outlay so investigate moving somewhere cheaper or back in with parents. If you don’t mind roughing it a little then consider being a property guardian for Ad Hoc. Rents including bills are as little as £250 a month. Ad Hoc specialises in creating temporary homes in empty buildings to make them less of a lure to thieves and vandals, www.adhocpropetty.co.uk
*Location. If you can’t afford a home in your desired area then look to the fringes. Estate agents will be happy to advise on this.
*Buy new. If you buy anew, you can take advantage of the Help to Buy equity loan scheme. This sees the government lend you up to 20 per cent of the cost, interest free for five years. So you only need a five per cent deposit and a 75 per cent mortgage. www.helptobuy.gov.uk