New research from digital wealth manager, Nutmeg, finds the dream of home ownership is an average of 4.8 years away for aspiring homeowners.
Nutmeg investigated how long it takes to put enough money away for a 10% deposit in England and revealed that in the least affordable cities, it could take a first-time buyer with no previous savings over 9 years to get together their deposit.
Hereford, St. Ives and Luton are the places that equal the overall average, where an individual first-time buyer will take 4.8 years to put away enough money for a 10% deposit. This number rises to over 9 years in two of the least affordable cities – London and Guildford, followed by Cambridge, Winchester and Oxford where it would take over 8 years on average to get on the property ladder. Some of the more affordable cities include Leicester, Manchester and Sheffield, where it takes an average of 3.5 years.
Regular monthly contributions can be less daunting than a one-off deposit and can make getting on the property ladder more manageable. In order to use the maximum Lifetime ISA allowance of £4,000, first-time buyers would need to put away £333 per month. However, if planning to buy with a partner, sibling or a friend, monthly contributions decrease to £166, as both parties would be able to use their Lifetime ISA benefits for purchasing their first home.
Lisa Caplan, Nutmeg’s head of financial advice said, “Many people dream of owning their first home, and we know that a house is the top investment goal for Nutmeg customers, but it can seem unachievable. However, by putting some money away each month and making the most of a government top-up available through a Lifetime ISA – your aspirations for home ownership might be closer than you think.”
From April 2017, people between 18 and 39 have been able to open a Lifetime ISA and contribute up to £4,000 each tax year. The government will then provide a 25% bonus on these contributions. Lifetime ISAs can be used toward the purchase of a first home or accessed in retirement. Nutmeg, which offers a stocks and shares Lifetime ISA, has over 16,000 Lifetime ISA customers.