Lack of clear understanding around the house buying process and the associated costs amongst those looking to buy their first home is resulting in first-time buyers underestimating the financial burden of buying homes in London.
According to the latest research from specialist lender Aldermore’s First Time Buyer Index, the he biggest expense when buying a home is saving for the deposit and this remains the number one obstacle for over one in three (34 per cent) first time buyers.
While first-time buyers across the nation face a deposit deficit of 31 per cent - equating to £15,388, their counterparts in London are under-estimating the deposit they will need by £75,000.
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 per cent equating to £15,388.
Prospective first-time buyers are also underestimating the amount of time it will take them to save for this deposit. Almost three fifths (58 per cent) believe they will be able to reach this goal within five years while in reality just half (51 per cent) of recent first-time buyers reached their goal in this time and actually over one in seven (16 per cent) took over eight years to get there.
Charles McDowell, Commercial Director, Mortgages: “It is clear there is a divergence between perception and reality when it comes to the house buying process. 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.