FTBs need cover as they build deposits

26 July 2010

On July 14 the Council of Mortgage Lenders released figures showing first-time buyers need deposits of 25%.

So the average deposit now amounts to £34,000. And if you add to that the cost of mortgage fees, legal fees, searches and surveys, the amount needed by a first-time buyer is nearer £37,000.

Unsurprisingly, the number of first-timers has fallen significantly in recent years and their average age has risen to 37.

Finding £34,000 for a deposit, let alone the additional £3,000 in costs and fees, will take the average first-timer years rather than months. I’ve read that a number of potential buyers are spending years tirelessly saving the funds to buy their first home, living with friends or family to keep living costs down.

While some can borrow part of the money from relatives I don’t imagine many have a spare £34,000 waiting to be claimed by a family member.

And the later individuals take out a mortgage, the later they leave it to look at protection requirements. But anyone can need an income protection, critical illness or life insurance policy, as these are not linked to mortgages.

The longer people leave it to take out a policy, the more medical history they will have which could affect the cost of cover.

With the average first-time buyer age rising it’s worth demonstrating the benefits of protection to those saving to buy their first homes and not just those who have already done so.

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