New research from Yorkshire Building Society has found that those attempting to get their first foot on the property ladder could be in for a shock as it is revealed that many may be out by thousands on their upfront purchase budget.
According to YBS, first-time buyers in just two regions of the UK intend to save enough money to get on the property ladder, with the rest underestimating the amount they are likely to need.
London reveals the largest gap between intentions to save and the reality of purchasing a property, with almost £70,000 unaccounted for by potential first-time buyers currently saving for their first property. First-time homeowners paid on average nearly £415,000 in the area last year with an average deposit of £118,531, but the research shows potential first-time buyers intend to save less than half of this at £49,000.
Would-be homeowners in the South East may not be saving enough either, with an average first-time buyer house price of £276,930 and an average 22% deposit put down in the region, potential homeowners are likely to need nearly £61,000 to get on to the property ladder. However, the Yorkshire’s research highlights potential first-time buyers in the South East intend to save just under £43,000 to purchase a property creating a shortfall of over £18,000.
In contrast, first-time buyers in Yorkshire and the Humber and Scotland may be overestimating the upfront costs of buying their first property. For instance, market data suggests first-time buyers in Scotland paid £137,714 and put down a £24,000 deposit, nearly £1,500 less than current would-be homeowners in the region are intending to save.
Chris Irwin, senior mortgage manager at Yorkshire Building Society, said: “While our research indicates first-time buyers in the majority of regions across the UK could do more to manage their financial expectations of buying a house, it serves as a reminder to potential homeowners of the importance of budgeting.
I’d encourage anyone with a dream of home ownership to really take time upfront to do the maths and work out how much they will realistically need to take that first step on the property ladder, including any up-front fees on top of a deposit.
When you’ve got a more realistic figure, it’s easier then to review your savings habits and work out what you’re able to save and over what period of time, to achieve your required goal. Breaking it down in this way, early on in the home-buying journey could really help first-time buyers.”