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MORTGAGE DEPOSIT ESTIMATES ARE FAR TOO HIGH

MORTGAGE DEPOSIT ESTIMATES ARE FAR TOO HIGH

More than 75 per cent of people in the Portsmouth area asked to estimate the deposit needed to buy a £250,000 new home massively overestimated how much was needed. Using the government’s Help to Buy scheme, buyers need just £12,500 for the deposit but a survey by housebuilder Barratt Homes reveals that more than 75 per cent questioned believed they would have to save at least £15,000. More than 30 per cent believed they would need to save between £25,000 and £30,000, more than double the real amount.

Adam Champion from mortgage company The New Homes Group said the figures are in line with buyers’ expectations. ‘Most people think you need at least a 10 per cent deposit on a new home when we start talking to them and are pleasantly surprised by the true figure of just five per cent,’ he said. Barratt Homes sales director Michelle Storer said the figures should be welcomed by anyone considering buying a new home.“Historically-low interest rates, together with Help to Buy and a wealth of mortgage options available at the moment, make now an excellent time to buy,” she said.

“Despite some uncertainty over Brexit the new homes market is extremely busy and the more people know about the low deposits the more people can move into their dream home.”
The survey also highlighted awareness of low deposits in the different age groups. Although everyone asked overestimated the amount needed, the amount estimated rose with age.
Those between 18-24 years old believed they would need to save an average of £19,000 for a deposit while the over-55s guessed a deposit would cost in excess of £23,000.

“Schemes such as Help to Buy are available to all ages but it is mainly first time buyers who have benefitted from the help so it is good to see the younger people are closer to the right figure,” said Michelle.

Source - Portsmouth News