SAVE UP TO SAVE MORE
Everyone who has ever purchased a property has been a first-time buyer sometime in their life. Many others are still hoping/ waiting to get onto that home-purchase ladder. But buying that first home could cost a lot more than aspiring home owners have saved up or budgeted for. There are lots of costs involved – and you can’t get out of paying them.
New figures from Yorkshire Building Society point out the real costs of first time home ownership and reveal that those looking to buy their first property can underestimate the real expenditure by many thousands of pounds.
The hardest part of getting on the home ownership ladder is the deposit. There’s no easy way to do this – ultra low interest rates are no help, so the best method could be scrimping by cutting down or cutting out habits that seem inexpensive but mount up over time. A couple both giving up a 20 a day cigarette habit will save around £7,000 a year.
The bigger the deposit, the lower your future mortgage payments will be. You will both have less to repay and your interest rate should be reduced – lenders typically cut levels when you can put down 20 per cent rather than 10 per cent, or 30 per cent rather than 20 per cent. Some banks and building societies have an extra “high lending charge” if you don’t have a large enough deposit.
According to Yorkshire Building Society, you must be realistic about the actual deposit. It found first-time buyers in just two regions of the UK intend to save enough with the others underestimating what they will need.
The two regions where first-time buyers are most realistic are Yorkshire and the Humber and Scotland.
First-time buyers in Scotland paid £137,714 on average and managed to save typically a £24,000 deposit.
At the other end of the scale is super-expensive London where you can’t buy a broom cupboard for the cost of a home in many other parts of the country. The same applies for much of the south-east of England.
In London, first time buyers paid £415,000 for their properties on average.
To get a good mortgage deal, they need to put up around £120,000 but potential starter purchasers only save £49,000 typically.
Across the UK, the average deposit required is £50,000 but average savings for home purchases come in at around £35,000. Owning a home is the dream for many but for some it will remain just that... a dream If you don’t have enough savings, you’ll either have to wait and raise some more or try the ‘Bank of Mum and Dad’. The deposit is the biggest single cost in home purchase. But there are plenty of others. You may have to pay mortgage arrangement fees, valuation fees, and legal costs. Some of these may be “free” but that could mean they are priced into the interest rate you are charged. Moving is expensive. Removal vans are pricey so if you don’t have too much, hire a van and get friends to help. You may also need cash for essential repairs. Some loans may insist on improving properties. If you are moving from furnished rented accommodation to your own home, you’ll need cash for essentials such as cooking, food storage, beds, chairs and tables. Which? Mortgage Advisers can help at which.co.uk/Mortgage-Advice or call 0117 911 8698.