14th January 2013
The firm has taken a deposit in this case to mean 20 per cent of the cost of a home. On that basis, buyers in London will need an average of £72,760 in savings or equity with a huge gap to the next town for which a calculation has been completed. In Reading, a 20 per cent deposit amounts to £39,789 while in Blackburn, the deposit is around a fifth the average in London at £14,470.
At Mindful Money we would point out that with a good credit record, you may not need a 20 per cent deposit – many 90 per cent loan to value mortgages are now available – but the rate at which you can borrow also remains relatively high in these instances.
Some banks are also starting to offer products at above 90 per cent loan to value – i.e. requiring less than a ten per cent deposit – where parents or other family members provide a guarantee in some shape or form though such help carries a financial risk for the families concerned.
But if you take 20 per cent as the level at which you can borrow at a reasonably cost-effective rate, then the table of what it takes to build a deposit in different centres will certainly provide some food for thought especially for those who prefer the weather in the south of the country but who like to see their money go far too.
Lowest deposits Highest deposits
|Blackburn (with Darwen)||£14,470||Portsmouth||£28,688|
|Bradford||£18,807||Exeter and Devon||£37,605|
This research is arguably a little self serving. As well as a shared appreciation mortgage, Castle Trust provides two savings products which track the Halifax house price index – which it refers to as HouSAs. These may well offer a way to build a deposit in a savings product that is related to house prices although you should of course consider all the options for savings and investments alongside them.
Its Income and Growth HouSAs can be taken out for terms of three, five or ten years. The Income HouSA tracks any rise or fall in the Halifax House Price Index and also pays an annual income of between 2 per cent and 3 per cent, depending on the investor’s chosen term.
The Growth HouSA offers a multiple of between 1.25 times and 1.7 times any increase in the Halifax House Price Index and limits the loss to between 0.75 times and 0.3 times any decline. Both HouSAs are available for investments of between £1,000 and £1million. (We suspect those with a million won’t be the typical first time buyer or their parents).