Most First Time Buyers are only borrowing three to three and a half times their income

publication date: Aug 28, 2014
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author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
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How much are first time buyer's borrowing?

The Council of Mortgage Lenders has broken down borrowing and the cost of property for first time buyers by region.

On average

  1. First-time buyers typically borrowing 3.47 times their gross income
  2. The typical loan size for first-time buyers was £123,865 in June
  3. The typical gross income of a first-time buyer household was £37,000 
  4. 19.3% of gross income being spent to cover capital and interest payments

Wales 
  1. First-time buyers typically borrowing 3.23 times their gross income
  2. The typical loan size for first-time buyers was £99,000 in the second quarter
  3. The typical gross income of a first-time buyer household was £30,400 (£15,200 each for two)
  4. 18.2% of gross income being spent to cover capital and interest payments

Scotland 
  1. First-time buyers typically borrowing 2.98 times their gross income
  2. The typical loan size for first-time buyers was £95,000 
  3. The typical gross income of a first-time buyer household was £32,300 (£16,000 each for two people)
  4. 16.7% of gross income being spent to cover capital and interest payments

Northern Ireland, buyers are buying below £100,000 
  1. First-time buyers typically borrowing 2.90 times their gross income
  2. The typical loan size for first-time buyers was £78,000 
  3. The typical gross income of a first-time buyer household was £26,300 (so two people earning £13,000 each)
  4. First-time buyer payment burden increased to 17.7% of gross income being spent to cover capital and interest payments

London, buyers are buying above £200,000 
  1. First-time buyers typically borrowed 3.90 times their gross income
  2. The typical loan size for first-time buyers was £212,000 
  3. The typical gross income of a first-time buyer household was £55,000 (this could be two people buying on £27,500 each) 
  4. 63% of first-time buyers bought properties priced at more than £250k ie pay 3% stamp duty
  5. They don’t HAVE TO but they do put down a 25% deposit on average – interestingly, this is higher than for the rest of England.
  6. First-time buyers paid 21.1% of gross monthly income towards capital and interest payments

Has Sunday shopping prevented people from putting money aside?
For many FTBs, not saving is due to spending on things like clothes, holidays, going out and even everyday purchases such as teas/coffees.


Take a look at my ‘savings calculator’ to see how easy it is for ‘unnecessary expenditure’ to end up costing £5,000 to £15,000 a year, without even thinking about it that much!

Download Kate’s ‘savings calculator’

That’s a decent deposit for most first time buyers across the country to buy, based on the averages from the Council of Mortgage Lenders.

Check out our other first time buyer articles:-
Also take a look at:-


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