They do not have to wait that long with a gifted deposit from a family member
A UK household saving the UK median of £180 per month would take almost 11 years of consistent saving to reach £23,549, the average amount paid by first-time buyers on a deposit in England.
This was revealed by new research from equity release lender more2life, which also showed that first-time buyers in Wales could expect to wait almost eight years to afford the average deposit of £17,038 in the country.
First-time buyers in Scotland, who are paying an average deposit of £14,230 to secure a property, would need more than six and a half years to save that amount.
more2life, however, said that a single equity release gift could propel a younger homebuyer on to the property ladder in far quicker time as data from the Key Market Monitor showed that the average sum gifted from equity release for use as a deposit in the UK reached £61,596. This is far above the average deposit for a first-time buyer, and therefore allows them to secure a better rate mortgage with a lower LTV.
The lender pointed out that first-time buyers in Scotland would enjoy the best loan-to-value (83%) after a family member used equity release to gift them a deposit, followed by those in England (84%) and Wales (85%).
“Trying to save enough for a deposit is daunting at the best of times, but with the cost-of-living eating into people’s disposable income and interest rates squeezing affordability further, first-time buyers are finding it harder than ever to take that first step onto the ladder,” Les Pick, director of manufacturing and adviser propositions at more2life, commented.
“However, with the older generation often sitting on 20 or even 30 years of house price growth, now may be the time to consider whether an early inheritance could make a positive difference to someone’s homeownership ambitions.
“Shaving 11 years off the amount of time it takes someone to buy their first property and positioning them to get a better mortgage deal can make a real difference to their future finances. However, over-55s need to ensure that they fully consider all their options and speak to a specialist adviser who will help them make the right choice for their individual circumstances now and in the future.”
