Great Britain

First-time buyer deposits reach record high of £46k – how to get help buying a home

FIRST-time buyers now face forking out more than £46,000 for a deposit for a home - up £3,000 compared to the year before.

The average amount new homeowners put down to get a mortgage in 2019 was £46,187 - seven per cent, or £3,032, more compared with the average £43,155 deposit the year before.

The initial payments varied wildly in each region, with first-time buyers in London having to put down an eye-watering £109,885 on average, compared to £24,091 in the north east of England, according to research by Halifax.

The average property price paid by those getting their first foot on the ladder was £231,455, up by nine per cent - or by £18,252 - from the year before, when it was £213,203.

The lender also identified the most and least affordable areas for first-time buyers, calculated by comparing average earnings with average house prices.

Burnley, in the north west of England, was found to be the most affordable area for new homeowners, while Hackney in London was deemed to be the most unaffordable place to buy.

What help is out there for first-time buyers?

GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have their own home.

Help to Buy Isa - It's a tax-free savings account where for every £200 you save, the Government will add an extra £50. But there's a maximum limit of £3,000 which is paid to your solicitor when you move. These accounts have now closed to new applicants but those who already hold one have until November 2029 to use it.

Help to Buy equity loan - The Government will lend you up to 20 per cent of the home's value - or 40 per cent in London - after you've put down a five per cent deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.

Lifetime Isa - This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25 per cent on top.

Shared ownership - Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25 to 75 per cent of the property but you're restricted to specific ones.

"First dibs" in London - London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.

Starter Home Initiative - A Government scheme that will see 200,000 new-build homes in England sold to first-time buyers with a 20 per cent discount by 2020. To receive updates on the progress of these homes you can register your interest on the Starter Homes website.

Unsurprisingly, the amount Londoners have had to find for a down payment has gone up the most by £27,764, or seven per cent, since 2018.

That's because the price of an average first-time buyer property in the capital has more than doubled over the past decade, from £222,107 to £453,385.

But despite the rising costs, the overall number of people buying their first home has remained almost the same over the past year, up around one per cent from 353,130 in 2018 to 356,767 in 2019.

Northern Ireland saw the biggest percentage increase in the number of first-time buyers, up by six per cent year on year, from 10,430 to 11,013.

This means that first-time buyers account for more than half of all house purchase mortgages.

Are you a first-time buyer who want to share tips on how you did it? Email us at [email protected] or call 0207 78 24516. Don't forget to join the Sun Money's first-time buyer Facebook group for the latest tips on buying your first home.

Russell Galley, managing director, Halifax, said that even though house prices have faltered in the year, first-time buyers are still battling with inflation, which is pushing up deposits.

He added: "This is in part explained by initiatives designed specifically to support this key group, including Help to Buy schemes and family support mortgages, and they also benefit from the continued period of record low interest rates.

"However, it's clear that more needs to be done to address more fundamental long-term issues, not least the shortage of new, affordable homes being built."

Many first-time buyers have benefited from an up to £3,000 government bonus by using a Help to Buy Isa.

Unfortunately, these closed to new applicants in December last year, although you've got until 2029 to claim the bonus if you've already got an account.

The savings account has been replaced with the Lifetime Isa, which lets you save more - up to £4,000 a year - and pays the government bonus annually.

You can find the top rate Lifetime Isa accounts here in our guide.

The Help to Buy loan is still available to first-time buyers. The government will lend you up to 20 per cent - or 40 per cent in London - of the property price, interest-free for five years.

It's helped buyers like single mum Charlotte Fletcher who was able to purchase her home with just one salary by lowering the cost of their mortgage.

But critics claim that using the loan pushes up house prices by up to 22 per cent of new-build homes.

Queen’s Speech: Her Majesty unveils plans to help first-time buyers and renters