According to Stephen Kerrigan, Mortgage Advisor from Doncaster, depending on where you live could see you reduce the time to save for a deposit by over two years should you take advantage of a 95% Mortgage.
Research made by Stephen Kerrigan, analysed the current average house price across each area of the market, such as what would a First-Time Buyer require for both a 15% and 5% deposit, and how many months of net monthly income is required to save each deposit.
It is reportedly known that across Britain, it requires the average First-Time Buyer to stump up 18 months of earnings, such as £2,105 in order to accumulate the £37,998 required for a 15% deposit on the current average house price of £253,323. However, in contrast, a 5% deposit of just £12,606 would only require them to place six months earnings as a mortgage deposit, reducing the number of months required to save by a whole year.
Of course, the biggest benefit to homebuyers looking to utilise the 95% Government-backed mortgage will be in London, with the average homebuyer earning at least £2,723, which currently requires 27 months of income to place a 15% deposit on the current average house price of £496,269.
Although, the ability to place just a 5% deposit means the income required reduces to just 9 months, a reduction of just 18 months. The Yorkshire and the Humber will also see some of the biggest reductions in the monthly earnings required to place a deposit, by reducing by 15 months.
With London and Yorkshire being the largest regional reduction, it’s no surprise that the capital also accounts for some of the biggest reductions at the local authority level. However, outside London, places such as Sheffield or Hull would see the average monthly earnings required to place a deposit fall by 12 months when comparing the requirement of a 5% deposit to that of a 15% deposit, as would place like Doncaster and Rotherham.
In a recent comment, Stephen Kerrigan, Mortgage Advisor said:
While stamp duty saving is currently a nice cherry on top of many First-Time Buyers’ cake. The saving made pales in comparison to the initial financial hurdle of a mortgage deposit. So, the ability to secure a government-backed mortgage with just 5% deposit should significantly boost buyer sentiment across the market.
However, it’s not just the sum required to take that first step onto the ladder that will see a notable reduction, but also the time it requires many to amass this sum. With aspirational First-Time Buyers able to get on the ladder for less and at great speed, a continued stream of buyer interest should keep the housing market buoyant from both a transaction and house price growth perspective, to say the least.