By Nathan Lee, TLE Correspondent
The average first time buyer takes four years to buy their first home, new research has revealed.
The study, conducted by Aviva, found most first-time buyers are £6,481 under budget when buying their property. Researchers discovered that almost three-quarters underestimate the cost of buying their first house by failing to take into account legal fees, stamp duty and other costs.
Buyers typically take nearly four years saving for a first home – banking an average £12,143 during that time. But in reality, the average total amount actually needed is closer to £18,624, the poll of 2,000 homeowners found.
As a result, more than half are forced to wait an extra two years and eight months before finally having the cash to get on the property ladder. And almost half confessed to coming close to giving up plans to buy their first home.
The stark statistics emerged in a study commissioned by Aviva, which has launched a First Home website which includes a step-by-step guide to buying a first home and a first mortgage jargon buster.
Aviva marketing director Heather Smith said: “Scraping together the cash for the deposit alone can be a mammoth task, but that’s just the first hurdle.
“It’s the other essential costs such as solicitors’ fees and Stamp Duty which can be the sting in the tail – not forgetting any essential repairs which might be needed once the keys have been handed over. First-time buyers face walking into a money pit if a first dream home turns out to be a nightmare. If the cash outlay needed to buy the house isn’t expensive enough, a hefty bill for unforeseen essential repairs is the last thing needed. Anyone looking to buy a home should investigate every nook and cranny of the property before putting in an offer and must not be afraid of asking for several viewings”.
The study found the average first-time buyer had £6,361 put aside for the deposit, more than £2,000 less than the £8,672 they needed. Legal fees were also under-budgeted for by almost half, with 48 per cent admitting they didn’t even think about this when putting money aside.
Savings for stamp duty were short by almost £1,000 while buildings and contents insurance was double the amount saved. Homeowners spend an average £3,727 on essential repairs to their newly purchased home – typically forking out around £1,680 more than expected. Mortgage fees and valuations, furnishing costs and insurances were also among the costs most hadn’t budgeted enough, or even at all for.
It also emerged that one in five who are looking to buy their first home now would consider buying a house which needed significant DIY or repairs, just to get on the property ladder.
Home buyers could avoid unforeseen expensive repairs by using Aviva’s online House viewing checklist; an interactive tool which lists potential maintenance trouble to look out for.
Money Put Aside
Deposit – £6,361
Stamp duty – £1,486
Fix/improvements – £2,047
Solicitor’s fees – £489
Survey – £287
Mortgage fee – £339
Mortgage valuation – £259
Plot reservation – £215
Furniture – £581
Contents insurance – £38
Buildings insurance – £41
Total – £12,143
Actual Costs
Deposit – £8,672
Stamp duty – £2,389
Home Improvements – £3,727
Solicitors’ fees – £756
Homebuyer’s house survey – £496
Mortgage fee – £548
Mortgage valuation – £476
Plot reservation fees – £393
Furnishings – £1,007
Contents Insurance – £78
Building Insurance – £82
Total – £18,624
Difference – £6,481