Research shows that single first-time buyers take a lot longer to save their deposit than couples. (Source: Hampton International) That might sound obvious, after all, two incomes means double the savings.
Across the country, the average couple looking to buy their first home with a 15% deposit will be saving for approximately five years. While, for a single person, the average is 10 years.
In London, the average time taken for a couple to save a 15% deposit is eight years, while a single person is likely to take 17 years to achieve the same goal.
These timeframes are extended, due to:
- Higher deposits
- Less disposable income
- Higher overall living costs
Aneisha Beveridge, Analyst at Hamptons International, explains: “Saving a deposit is still the biggest barrier to buying a first home. It takes a single person more than a decade to save up in the current climate.
“But the additional support from Help to Buy brings down the time it takes to raise a deposit by over six years for a single first-time buyer.
“Slower house price growth in the capital has meant that it’s now six months quicker for a couple, who share household spending, to save up for a 15% deposit in London. But it still takes a couple in London eight years to save up, twice as long as someone buying a home in the North.”
What could you do to speed up the process?
Whether you are single or partnered, there are several things you can do to make getting onto the property ladder much easier, including:
- Making use of Lifetime ISAs: These are tax-efficient saving accounts which can be used to deposit up to £4,000 per year. This can be used to fund your home deposit. In addition, your deposits are topped up with a 25% government bonus at the end of every tax year.
It is possible to use more than one Lifetime ISA to fund a mortgage deposit, so both you and your partner can save into separate accounts. If you were to contribute the maximum each year, you could save a total of £8,000 between you, plus £2,000 in government bonuses.
- Accessing government schemes: There are several programs aimed at helping first-time buyers to get onto the housing ladder, including Help to Buy Equity Loans, which break the cost of a home into three parts; a 5% deposit (Paid by you), a loan for the remaining 20% deposit (repayable by you, with no interest for the first five years) and a 75% mortgage (sourced by you and repaid as normal).
Another option is Shared Ownership, which enables you to part-buy a property and pay rent on the outstanding amount. These arrangements are usually available through housing associations and it is possible to continue to buy larger shares in the property, until you own most, if not all, of it.
- Looking for a low deposit mortgage: It is possible to get mortgages which require no deposit, or as little as 5% of the loan value. These usually require a deposit to be made into an account as security, though this money will not be used toward the cost of the house and is eventually refunded. That means, if you have relatives who can afford to tie capital up for a few years, with the guarantee that it will be returned to them in due course, you may be able to take advantage of this.
- Taking care of your credit score(s): Lenders will look at your credit score and history to determine whether they will offer you a mortgage, and at what rate. The better your credit score, and the cleaner your record, the better offers you are likely to receive. There are a range of things you can do to improve your credit score, including checking it regularly and reporting any mistakes and making sure you are on the electoral roll and keeping your personal details up to date. Of course, staying on top of your credit and making full repayments, on time will also help.
- Asking for help from family: If you are fortunate enough to have family members who can offer some of your deposit as a gift or loan, take it. This will go a long way toward securing a mortgage and making sure that you can afford your first home in a much shorter timeframe.
If you are single and finding that saving for your first home is taking longer than planned, it may be worth considering the alternatives, which include:
- Continuing to rent until you meet someone you want to buy a home with, whilst continuing to save
- Agreeing to buy a home with a sibling, friend or other family member
- Doubling your efforts to make sure that you are securely in your own home before embarking on the next stage of life
When to engage with a professional
No matter what stage of life you are at, single, loved-up or even if you have been married for a while, if you are ready to buy your first home, either together or as an individual, it’s time to get in touch with us for advice and guidance to help you to make more confident decisions surrounding the homebuying process.
For more information, or to discuss your options, contact us on 0207 808 4120.