There is a real lack of understanding about the house buying process and associated costs amongst those looking to buy their first home, new research has revealed.
The biggest expense when buying a home is saving for the deposit and this remains the number one obstacle for over one in three (34%) first time buyers.
However, according to Aldermore Bank’s Q3 2017 First Time Buyer Index, prospective buyers are falling short in their estimations of how much they need for their first deposit, aiming to save an average of £34,397. In fact the average deposit needed is £49,639 according to the ONS – meaning many first time buyers will be faced with a huge deposit deficit of 31%, equating to £15,388.
Perhaps unsurprisingly, this disparity is particularly evident in London, with first time buyers aiming to save an average of £48,000, when in fact official figures show the average deposit is more than double at £123,000.
Prospective first time buyers are also under estimating the amount of time it will take them to save for this deposit. Almost three fifths (58%) believe they will be able to reach this goal within five years, but in reality just half (51%) of recent first time buyers reached their goal in this time and over one in seven (16%) took over eight years to get there.
“It is clear there is a divergence between perception and reality when it comes to the house buying process,” commented Charles McDowell, Commercial Director, Mortgages. “This often means those looking to buy are under-estimating the associated costs as well as the time it could take to complete, especially with first time buyers expecting it to take four years on average to save for a deposit.”
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