Wed 25 Apr 2018 View all news articles
'Alternatives', 'Boomerangers' and 'Minimalists'. According to the latest research from Santander Mortgages, these are the three new strategies first-time buyers are adopting to save up a home deposit.
Santander found that more than 40%of first-time buyers are considering alternative finance options to raise their house deposit.
Of these ‘alternatives,’ 22% are considering selling shares in the property offering a potential capital return when the home is sold. A further 19% are planning to embrace crowdfunding to raise their deposit, while nine per cent are planning on selling a ‘bond’ to investors offering a guaranteed interest payment. Of those considering alternative finance options, 8% would explore selling raffle tickets for an equity share in the property after the deposit total is reached.
To save money for deposits, 38% of first-time buyers would consider becoming a ‘boomeranger’ and moving in with their parents or partner’s parents. Those willing to move back home would be open to staying for an average of two years, with 15% willing to live with them for more than five years. A further 10% of those planning to buy their first property, either expect to, or will move back in with their parents after completing university, while 12% have had to move home after completing their course to save for a deposit.
The research shows ‘minimalists’ are happy to downsize their lifestyles to save for a house deposit. Almost two million Brits are willing to switch nutritious meals for pot noodles in a desperate bid to save money, while 21% will give up alcohol to raise funds. More than one in ten (11%) would sacrifice their fitness and quit the gym to cut back their expenditure and boost their savings.
Those looking to buy anticipate needing to save on average £20,478 for a deposit. With the average UK wage sitting at £26,0012 hopeful first-time buyers are choosing to eliminate all but the most essential purchases to save enough money. The findings reveal 17% of Brits are looking to buy their first home within the next five years. Those planning to get a foot on the housing ladder have been saving towards a deposit for an average of 21 months and have typically raised £10,379 so far, equating to a monthly saving of £492.58. Meaning they have around another 20 months left of saving for a deposit.
Perhaps unsurprisingly, those looking to buy within the next year have adopted a more aggressive savings plan putting away £744.22 a month on average. This compares to those who are not planning to buy for at least another five years, who manage to save an average of £352.56 per month.
Miguel Sard, Managing Director of Mortgages at Santander UK, said: “We know that getting a foot on the housing ladder is tough and our research suggests first-time buyers are taking some quite serious measures to make that first step. They are showing incredible levels of resilience, determination and ingenuity to save for a deposit and exploring all available options to maximise their savings.
It is important that those considering alternative finance routes to raise funds read up on all the relevant regulations to avoid potential prosecution or huge legal fees. We would urge them to apply the same dedication to choosing the right mortgage and to talk to prospective lenders to see what support is on offer.”
Source: Property Reporter
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