- Post Office Money research reveals average time to save for a deposit has decreased year over year
- FTB households save a combined £843 a month towards a deposit, on average; 21% of the total FTB household income
- Majority of FTBs will also receive some financial support, only 29% save solo
- One in three FTBs work overtime to supplement their deposit savings, while 14% will take on an additional job to reach their goal
- Post Office Money launches online toolto help people map their deposit savings journey to reach their property goals
First time buyers (FTBs) households collectively put away an average of £843 a month when saving for a deposit to buy their first home, 21% of the combined average FTB income (£49,263), according to new data from Post Office Money1. This varied across the country, ranging from £682 in Scotland to £1,046 in London.
The average deposit for first homes in the UK last year was £43,585, according to the Office for National Statistics2. This varied from £21,696 in Blackpool to £170,003 in London, with keen FTBs managing to set aside 21% of the value of their property in advance of their purchase, on average. [Full deposit-saving data across more than 80 locations in Notes to Eds]
A study of more than 1,000 people who made their property ownership goals a reality in the last 24 months, revealed the time it takes to save for a deposit is down on last year. It took homeowners 3.6 years on average to save the lump sum required, compared to the 3.8 years it took FTBs in last year’s report, suggesting the saving journey may have become easier.
Extra sources of income
However, the ability to save for a home in such a short amount of time is likely due to many FTBs receiving assistance. While nearly a third (29%) of FTBs managed to save up the full amount by themselves, the research suggests people are drawing upon other sources for income to top up their deposit and speed up the process. One in five (20%) used the help of a partner to save for their deposit, with others taking out a loan from the bank of mum and dad (15%) or using money from an inheritance (12%). While a lot of people are able to save by themselves, understandably many also require a financial leg up to get on the ladder.
Saving by any means possible
As well as relying on loved ones, the study shows that FTBs are having to get creative to supplement savings in their journey to get on the property ladder. A third (33%) admitted to working overtime to bring in extra cash, while a quarter (25%) were thrifty and sold items on auction sites such as eBay. Almost a fifth (18%) of people found a new, higher paying job, while 15% used credit cards to cover everyday expenses.
When calculating the amount needed to put down a deposit on their first home, almost half (48%) used property prices in their desired location to calculate how much they needed to save. Almost a quarter (23%) said they took the advice of an IFA, while a further 10% said they asked a parent to estimate for them.
Ross Hunter, Post Office Money comments: “Our study shows that the FTB saving journey is taking less time, often due to generous financial contributions from loved ones who help to speed up the process. However, it’s clear that aspiring homeowners are still putting away large sums of money on a monthly basis and exploring an array of ways to bring in extra income.
The journey to owning your first home can be stressful, especially for the 29% of FTB’s who managed to save their deposit without help. Post Office offers two innovative products mortgage products for those who want to get on a ladder with a lower deposit, Family Link and First Start.
“Post Office Money also has launched a tool that allows FTBs to hunt for their most affordable local areas and also figure out how long they it will take them to save for their deposit: https://www.postoffice.co.uk/mortgages/deposit-calculator.”