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How long does it take to save for a deposit?

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With the new decade just around the corner, you may be thinking 2020 is the year you buy your first home.

If so you’re likely to be asking yourself questions such as how much can I afford to save and how long will it take to build enough for a deposit?

A house deposit typically requires 5%-10% of the value of a property. The more money you put towards your deposit means the less you need to borrow from a mortgage provider and, as a result, will reduce the amount of interest you will need to pay back to the lender.

The amount you need to save for a deposit will also be largely dependent on factors, such as:

  • House prices, which vary greatly depending on where you’re looking to buy
  • How much you can afford to borrow
  • How willing lenders are prepared to loan your mortgage to you
  • How much of a deposit you can build

According to the Office for National Statistics (ONS) the average deposit saved for first homes across the UK is £43,585. However, the location of where you are purchasing a home significantly influences prices, and therefore the deposit required. For example, the average deposit saved in many parts of the UK is approximately £21,000 while it’s £170,000 for those buying in London.

The average value of UK house prices is currently at £235,000, according to the latest information from the ONS.

Average UK house prices peaked at £235,000 in August 2019

Average UK house price, January 2005 to September 2019

Average UK house prices in August 2019

Source: HM Land Registry, Registers of Scotland, Land and Property Services Northern Ireland, Office for National Statistics – UK House Price Index1

Further figures suggest the average saving for those wishing to buy their first home is £843 per month.1 Saving at that rate towards the average deposit of £43,585 means it would take over four years to save for a house deposit.

In reality it is much more down to personal circumstances; some people may take much longer or shorter to save for their home deposit. There are additional elements to consider too, including the increasing number of first-time buyers relying on the ‘Bank of Mum and Dad’ to help them get on to the property ladder. Legal & General reported that the average contribution from parents in 2019 is £24,100.2 This is very circumstantial and certainly not an option for most people looking to get on to the property ladder.

To help you get a fuller understanding of your finances, and how much you can afford to save when working towards a home deposit we have a Budget Planner calculator. Click here to use this free tool to get a grasp on your income and outgoings.

How we can help

At Cooper Associates Mortgages we have in-house experts with years of experience in arranging mortgages for people just like you. You can start by arranging an appointment with one of our Mortgage Advisers who are happy to talk through the mortgage application process specific to your individual needs and circumstances.

Our service is fee-free and without obligation. We will provide honest feedback if you are not currently able to purchase a property, and we can advise what steps you can take to get yourself into the position so you can obtain a mortgage in the future. Call us on 01823 273880 or complete this form and we will contact you to arrange an appointment.

1 https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/september2019
2 hhttps://www.propertyreporter.co.uk/finance/over-a-third-of-prospective-home-buyers-to-rely-on-bank-of-mum-and-dad.html

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