The latest research by new home specialists, Stone Real Estate, has looked at just how long it will take to earn the equivalent of a 15% mortgage deposit for a new home based on the daily wage at a number of different salary brackets.
Stone Real Estate looked at the net earnings per day for various salary levels since the year began and at what point this year or next, these earnings would have reached £43,975, the average 15% deposit for a new build home (£293,167).
The data shows that for those on a wage of £1.2m or above, the minor sum of £43,975 has been in the bag since yesterday, just 26 days into the new year.
However, spare a thought for those buying in London where the average new build cost is £502,228 and a 15% deposit equates to £75,335, as they would have to be on a wage of £2.1m or above to hit the threshold as of yesterday.
In contrast, those just starting out on a wage of £20,000, would have to work for 937 days, 912 days more, just to hit a 15% mortgage deposit on the average new build home, meaning they won’t reach the same point until 26th July 2022!
This is again higher in London, where it would require someone on £20,000 to work for 1,604 days or until 23rd May 2024 just to earn the required deposit of £75,334.
Raking in £50k a year? It would still have to work until 4th March next year (428 days) or 3rd January 2022 in the capital.
From £70,000 a year and up you’re on track to save the average UK new build deposit before 2020 is out, taking 241 days on a £100k salary and just 58 if you’re earning £500k.
In London, you need to be earning £200k to make the cut by August of this year (235 days), while £500k will see you reach the sum in just 100 days!
Even when taking life’s other expenses into account and working on the basis of saving just 20% of your net income, those on £400,000 or more would still have tucked away enough to afford a 15% deposit on the average UK new build this year!
Founder and CEO of Stone Real Estate, Michael Stone said, “For many aspirational homebuyers across the UK and particularly in London, the financial hurdle of compiling that all-important mortgage deposit is huge and it can take them years of saving in order to get to that point.
“Of course, life makes it impossible to save 100% of our income and while it may take you even longer tucking away 20% of your net income, doing so will soon provide you with a very firm foundation and luckily for most of us, the Bank of Mum and Dad will help to reduce the time it takes to get a foot on the ladder considerably.
“The silver lining of this long savings slog? Yes the initial hurdle is high, but the reward is one of the most fulfilling in adult life and when buying a new home you’re not only getting great value for money, but your investment will require little to no maintenance for the foreseeable.
“Not only this but a new home will hold its value much better than an existing property and even during periods of market uncertainty as we’ve seen recently, new home buyers have enjoyed robust price growth and a great return on their hard-fought investment.”