23% of first-time buyers have to save for five years for a deposit

Just under a quarter of first-time buyers have to save for five years in order to raise enough money for a deposit for a mortgage.

That is according to Santander Mortgages, which found that 1.9 million (23 per cent) of first-time buyers need to save for more than five years to raise a deposit, as the amount needed is so high.

It was found that the average amount of time it takes first-time buyers to save for a deposit is 3.3 years.

Around 28 per cent of these take a second job or work overtime in order to save for a deposit and a further 27 per cent are hoping to boost their deposit with a loan.

Phil Cliff, director of the firm, said: "Saving for a deposit is no easy task, especially in today's financial climate, with many customers, especially in recent years, having to put down larger deposits to secure their mortgage."

He suggested the bank's ten per cent deposit products or its First Home Saver account, which has an interest rate of five per cent.

There are more options for first-time buyers trying to save for a deposit, such as an Isa, which offers tax-free interest or a new government scheme designed to help first-time buyers.

Those considering their options may want to use a price comparison site, such as Money Expert, to find the advantages and disadvantages of each one, as this can help them make a decision.

On March 23rd, Chancellor George Osborne announced a new scheme aimed at first-time buyers as part of the Budget.

Under the new initiative, first-time buyers only have to save five per cent of the deposit themselves.

The other 20 per cent will be borrowed from the government and home-builder respectively.

Any first-time buyers earning less than £60,000 a year and who want to buy a newly-built house are eligible.

The money borrowed is paid back in the form of a loan but no interest is charged for the first five years.

 

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