Why First Time Buyers are struggling to save a deposit

publication date: Aug 27, 2014
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

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Why First Time Buyers are struggling to save a deposit

It is extremely daunting thinking that you have to save thousands of pounds to buy a new home, when you may not have ever saved anything in the past.

The good news is, it is possible to do! It’s not going to happen in a short space of time though, most first time buyers will need around three years to save for a deposit. Bearing in mind the average first time buyer home ranges from £60,000 to £250,000, depending where you are in the country and you need a minimum of 5% deposit, then you need a lump sum of £3,000 to £12,500 for a deposit, which, including costs will go up to around £5,000 or £15,000.

For two people this isn’t too bad to have to save. You’d need to be putting by £140 per month to £420 per month. If you have to save the latter yourself, that is quite hard and may mean you have to move home to save on renting and not going out as much as you did. But hopefully the sacrifice will be worth it.

Part of the problem in saving is we have really shifted to a spending culture in the UK and one of debt, even for people in their 20s. This makes it even harder to save as those around you are probably spending away making it difficult for you to stay in or stick with the same clothes and not go on fun holidays for a few years. For more advice on buying a home for the first time, Check out our checklist for First Time Buyers

What can you stop spending money on?

Spending time with many teenagers and people in their early 20s and doing surveys, we have worked out that people are spending thousands of pounds on things that could be cut back on, or cut altogether.

These include some things you might not even realise you are spending thousands on, such as nights out over the weekend. It is easy to rack up a £100 bill for an evening with a meal and drinks, especially if you are clubbing until all hours. And there is genuinely nothing wrong with this, people should have fun. However, if you want a house, these are the kind of things you have to save on. £100 a week on going out would cost £5,200 a year!

And we are a nation of coffee and tea drinkers, spending billions of pounds a year on thinks like the $5 bucks at Starbucks – the idea being it’s virtually impossible to visit Starbucks and spend anything less. To put this into UK monies, say you spend £3 a week at a coffee house, over three years, that’s nearly £500. Personally I’d take a flask or buy my own coffee cups and make it myself before I left rather than buy it on the way – it’s a lot cheaper! For more options on how to buy your first home read our Help to Buy and Shared Ownership checklists

Consider investing your savings

Ideally you want to invest the money you save. Firstly, you don’t want to have to pay tax, nor do you need to, on any gains your savings make. You can use things like ISAs to help you. Secondly, talk to a local independent financial advisor on how to maximise the returns from any savings you make.

The advantage of talking to an independent financial advisor like Chase de Vere early on is they will help to make sure all your finances are in order so when you apply for a mortgage,  you are more likely to get accepted and hopefully help you secure the best deal. 

Need help?
We have created a special calculator to help you work out what you could save every month or year if you cut back on some of your spending. You can download the calculator from

Kate’s calculation page

Can you help others?
Tell us what you did to help you save for a deposit and we’ll add it to our list!

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