Taking out a mortgage is the most common way by which people buy property in the UK.
It allows them to arrange funds for the purchase while managing their day-to-day finances. But finding a suitable mortgage depends on many factors, such as the lender, available mortgage schemes, and the deposit.
The deposit is among the most important factors that will determine how easily you can purchase your first home. And this guide aims to provide first-time buyers with a good idea of the average deposit required for the purpose.
Table of Contents
- What is A Mortgage Deposit?
- Becoming A First Time Buyer In The UK
- Average Property Price In The UK For A First-Time Buyer
- What Is The Average First-Time Buyer Deposit?
- 1. What is the average mortgage size for a first-time buyer in the UK?
- 2. What is the average age of first-time home buyers in the UK?
- 3. How many first-time buyers are there in the UK?
- 4. How long does it usually take to save for a deposit for a first-time buyer?
- 5. Is it possible to get competitive rates without putting down a large deposit?
What is A Mortgage Deposit?
The deposit is the amount of money that you need to put down when taking out a mortgage to purchase a property. It is usually specified as a percentage of the value of the house to be purchased.
For first-time property buyers, determining the right deposit size they need to provide is crucial since it directly affects the interest rates and availability of options.
But doing so may be challenging as you need to take care of several things at the same time when planning to buy a house for the first time. Fortunately, knowing the average deposit size for first-time buyers can help make things a little simpler.
A larger deposit is generally better since it reduces the amount you need to borrow and the mortgage repayments. This is referred to as loan-to-value (LTV) and it is the percentage of the property value to be paid using the mortgage.
Put simply the higher the deposit, the more equity there is in the property, this reduces risks for the lender in the event of repossession.
As should the property value reduce, higher levels of equity theoretically should mean even though there has been a reduction in sale value, it will still be enough to recoup the original mortgage lent.
Becoming A First Time Buyer In The UK
Before looking at the average deposit size for a first-time buyer in the UK, it is essential to understand the requirements that allow you to buy property.
The primary requirement for purchasing property in the UK is that you should be at least 18 years of age, with some lenders criteria you need to be older.
If you are able to purchase property before reaching the age of 18, your parents or guardians will own it through a trust usually. They will be the legal owners until you legally become an adult.
Disclaimer: The average values used in this article are subject to change and were used to the best of our ability when writing the article.
Average Property Price In The UK For A First-Time Buyer
The average price of houses that first-time buyers generally consider for purchase is around £245,958.
However, this average price is for houses across Great Britain, the price can vary significantly depending on the regions in which you are looking to purchase.
It is important to note that the most expensive houses for first-time buyers are typically in London.
Houses here can cost as much as £469,496 on average, while those in the NorthEast region are the most affordable, with the average price being £139,984.
What Is The Average First-Time Buyer Deposit?
If you need to take out a mortgage in the UK, a deposit of at least 5% of the property value is required. The remaining 95% of the value will be loaned by the lender, allowing you to buy the house.
However, as explained above, putting down a smaller deposit can lead to high-interest rates, making repayment and meeting lenders affordability requirements more difficult.
That is why even first-time buyers try to save and put down as large a deposit as possible.
Generally, this deposit amount is around £61,000, but it can vary depending on the region where the house is located.
The average first-time buyer deposit in London is 34% of the average property value. So, for a house costing around £425,000, the deposit will be £144,500.
Other areas in the UK where houses are most expensive include the counties of West Sussex, Surrey, Oxfordshire, Kent, etc.
The average house price in such regions is around £300,000, and the average deposit size for a first-time buyer is usually £72,000.
3. East Of England
Areas such as Essex, Suffolk, Norfolk, and East of England also have more or less the same average first-time buyer deposit as those in the SouthEast region.
4. South West
The South West region includes Somerset, Devon, Cornwall, Bristol, and other areas. Property prices here are not extremely high, and first-time buyers usually put down around £52,800 as a deposit. Buying a home in these regions will set you back by £220,000 on average.
5. East Midlands
Nottingham, Derby, Lincolnshire, Leicestershire, and nearby areas are included in the East Midlands, where property prices average around £190,000. Most first-time buyers purchasing property here put down a deposit of £45,600 on average.
6. West Midlands
West Midlands encompass several regions, such as Worcestershire, Warwickshire, Staffordshire, Shropshire, and Herefordshire. Property prices and first-time deposits are similar here to those in the East Midlands.
The Northwest is a densely populated region and includes Lancashire, Greater Manchester, Cumbria, and Cheshire.
It also includes the cities of Liverpool and Manchester, and first-time property buyers usually deposit around £36,000.
The average first-time buyer deposit in Wales is the same as that in the Northwest, as property prices are similar.
9. Yorkshire And The Humber
Sheffield, Bradford, York, and Leeds lie in Yorkshire, while areas like North of Yorkshire and East Riding of Yorkshire are included in The Humber.
With average property prices being £140,000, the average first-time buyer deposit is around £33,600.
While the property prices in different regions of Scotland can vary, the average deposit first-time homebuyers put down is £32,400.
11. Northern Ireland
In Northern Ireland, the average first-time buyer deposit is £31,200, with the average property price being £130,000.
12. North East
The North East is the most affordable region in the UK when it comes to purchasing property. Here, the average property price is £110,000, with the average deposit of a first time buyer being £26,400.
1. What is the average mortgage size for a first-time buyer in the UK?
The average mortgage size for a first-time buyer in the UK is £198,779.
2. What is the average age of first-time home buyers in the UK?
The average age of first-time property buyers in the UK is 33.4.
3. How many first-time buyers are there in the UK?
As of 2022, there are more than 370,000 first-time home buyers in the UK.
4. How long does it usually take to save for a deposit for a first-time buyer?
Most first-time buyers start saving for mortgage deposits around the age of 24 and purchase their house at the age of 32 to 33. Thus, saving a large enough deposit takes close to eight to nine years.
5. Is it possible to get competitive rates without putting down a large deposit?
While most lenders will charge high rates if your deposit size is small, an experienced broker may help find lenders willing to offer good rates in such conditions.
If you’re planning to purchase property for the first time, knowing the average mortgage deposit size can be quite helpful.
Depending on the region you are planning to purchase property in, the deposit required may be larger or smaller.
Also, it is extremely important to remember that these are just the average deposit sizes. To determine the actual amount you need to put down, you will first need to consult the lender.
That is why conducting proper research or hiring a broker to locate a suitable one is strongly recommended.
Your home may be repossessed if you do not keep up repayments on your mortgage.
All content is written by qualified mortgage advisors to provide current, reliable and accurate mortgage information. The information on this website is not specific for each individual reader and therefore does not constitute financial advice.
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