Covid curse: FTBs forced to raise an extra £23k to buy first home

First-time buyers (FTBs) that have bought their home in the last 18-month period since March 2020 have experienced an increasingly expensive process, forcing them to raise additional funds.

That is according to Aldermore Bank’s latest First Time Buyer Index, which surveyed over 2,000 prospective and 500 actual first-time buyers.

Raising a deposit

The survey revealed over half (58%) of first-time buyers needed to raise a larger deposit than initially intended, due to the impact of the Covid-19 pandemic.

The average increase was an additional £22,849, bringing the deposit size up to £62,572 (an average of 18.6% of the property value).

It took FTBs who bought since the beginning of the pandemic an average of nearly five years to save up enough.

A lengthening and more frustrating process

The process of buying has become more complicated during the 18-month period after the pandemic began with delays and false starts increasing the challenges and expense.

Even having an offer accepted took multiple attempts for many; two-in-five (40%) took two or more offers to secure the home they bought stretching out the process and raising costs. Prior to that, half (49%) were in the process of buying a different property only to have it fall through. This cost new buyers an average of £2,403, with one in nine (12%) spending £4,000 or more.

Increased challenges and delays meant first-time buyers say they were delayed by an average of 3 months, with one in six (16%) being delayed by over five months or more.

These extra barriers and costs meant that nearly half (48%) felt they did not get the home they wanted because they had to compromise so much to get on the housing ladder.

Meanwhile, the financial impact forced over half (52%) to leave their house empty for a few months because they were unable to afford furniture immediately.

The stress of the house buying process also affected people’s personal lives, with nearly half (46%) saying that the process caused issues in their relationship.

Additional costs

Excluding raising of the deposit, often overlooked are the other costs associated with purchasing a property, including solicitor and moving fees. These extra fees set the average first-time buyer back a total of £4,486.

Jon Cooper, head of mortgage distribution at Aldermore, states: “Becoming a homeowner is a wonderful step forward in a person’s life but our research shows the persistent effects of the pandemic are causing high levels of financial challenges in the journey.”

“While costs and complicated processes may feel daunting, we’ve found first-time buyers are glad they did it, with 78% saying the stress was worth it to find a home.”

He concludes: “I would advise would-be buyers to plan carefully to ensure they are prepared for the range of costs involved and to seek a broker who can be a great help in cutting through the jargon and guiding you through the process.”