Amid rising house prices, saving for a deposit has become a big challenge for many aspiring first-time buyers in the UK. Most first-time buyers will need several years to accumulate enough cash to put down towards their first home.
Now, new research suggests that female first-time buyers may be at an even greater disadvantage when it comes to saving for a home, with most requiring a significantly longer timeframe than their male counterparts. But why is this the case?
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Why do female first-time buyers need longer to save for a home?
According to a new study by financial comparison website GoCompare, the gender pay gap presents financial disadvantages that leave women needing 51% longer than men to save for their first home.
GoCompare found that female first-time buyers need an average of 5.5 years to save for a deposit. In comparison, male first-time buyers need 3.7 years.
This is attributable to the fact that aspiring female homebuyers receive, on average, lower weekly earnings than their male counterparts. As a result, their ability to save enough for a house deposit is severely impaired.
Indeed, of the aspiring homeowners who can only afford to put away up to £199 per month towards a deposit, 58% are women. At the other end of the scale, 19% of men are able to save over £400 per month for a deposit, compared to just 13% of women.
Despite the gender wage gap dominating headlines in recent years, there’s little awareness of its impact on prospective buyers. Research shows that 74% of homeowners are unaware of the gender pay gap’s impact on women’s ability to save for a home. This includes 68% of women who are not aware they need to save longer than men to buy a home.
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Is there any support available for first-time buyers?
For first-time buyers struggling to save for a deposit, the good news is that there are several government schemes available to help them get on the property ladder with a smaller amount.
However, the stats reveal that just a tiny percentage of those who are eligible (27%) utilise these schemes. In fact, men use them more than women. This is despite the latter having a harder time saving for a deposit due to the gender pay gap.
One government scheme that aspiring first-time buyers should seriously consider looking into is the Help to Buy: Equity Loan scheme. This scheme can help you get on the property ladder faster, as you only need to come up with a 5% deposit. The government will give a loan of up to 20% of a home’s value (40% if in London). The first five years of the loan are interest-free.
Aspiring buyers should also look into a lifetime ISA. With this product, you can save up to £4,000 a year and receive a 25% government bonus (capped at £1,000) to use towards buying your first home. This bonus does not have to be paid back.
What other options are available for first-time buyers?
First-time buyers who can withstand a little risk can also opt to invest their savings in a stocks and shares ISA to accelerate growth.
Although investing in stocks is inherently riskier, and you could get back less than you put in, there is potential for greater returns over time than if you were to leave your money in a regular cash savings account.
Just make sure you do your research before you invest and seek professional advice if necessary.
