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First Time Buyers Underestimating the Cost of Their First Homelog Entry Page

14 March 2018

The majority of aspiring first-time buyers ‘wildly’ underestimate how much their first home will cost, according to new research* (*Source: My Home Move, May 2017).

The research, which was conducted amongst 1,000 aspiring first-time buyers across the UK, found on average a mortgage on a property could cost up to 64% more than anticipated.

Assuming a mortgage deposit of 5% and rate of 3%, the research looked at different price brackets how much first time buyers can expect to spend on monthly repayments.

Of those looking to spend up to £100,000 on their property, the majority wished to spend around £350 a month, while those in the £100,000 to £150,000 bracket expected their mortgage to cost in the region £550 each month.

However, a home costing £100,000 would command a mortgage of £450 a month, 28% more than expected, based on the borrower scenario above. A property worth £150,000 costs £676 a month in repayments, 23% more than the aspiring first time buyer’s calculations. Those looking at a £200,000 property were 64% out, after expecting to have monthly repayments of £550, when in reality based on the 3% rate, it would be £901. There was also a 50% difference for those looking at homes worth £250,000, with buyers hoping for £750 a month, but the reality being £1,126.

*Originally sourced from Estate Agent Today