Students 'using gap years to save for homes'

Students 'using gap years to save for homes' By: Andrew Regan

Students in Britain are increasingly using a gap year to work and save for the deposit for a first home, according to a new study. Twice as many students are choosing to save for a housing deposit over a gap year, rather than see the world, as first-time buyers continue to struggle to get onto the property ladder.

Conducted for bank Abbey, a new poll indicates that one in ten of those taking a gap year to travel over the past ten years would not choose to see the world on their year off today, while 42 per cent of current students have already started to put money away for their first home.

The average first-time-buyer now spends 147,834 on a new home, requiring thousands of pounds for a deposit on their first-time buyer mortgage. However, just 19 per cent of students currently use their cash to travel after graduation and many past graduates wish that they had saved more and worked harder during their time at university.

According to Abbey Mortgages, steep house price rises have changed students' attitudes and made spending money on round the world trips less popular, as deposits required for a first-time buyer mortgage rise and it becomes harder to justify blowing a small fortune on gap year.

Meanwhile, first-time buyers are being urged to exercise caution despite recent reports that house prices are dipping slightly in Britain and expert predictions that they will fall still further during 2008.

In light of the recent global credit crunch and economic uncertainty, several lenders have chosen to tighten their criteria for first-time buyers by raising the minimum deposit required from five per cent to ten per cent.

This means that many UK first-time buyers are now reliant on their parents to help them secure a deposit for their first home, while others team up with groups of friends in order to raise the cash required to purchase a property.

For those who are attempting to save up for a deposit, they will need to keep it in the right place - ideally one which is safe (which rules under the mattress out) and which pays a high rate of interest. A bank savings account, for instance, could help.

However, it's not all doom and gloom for first-time buyers - an expert from FirstRungNow claims that they are benefiting from new home information packs (Hips) because they provide addtional information on properties and reduce costs for new homeowners.

Disclaimer:
This article has been written for information and interest purposes only. The information contained within this article is the opinion of the author only, and should not be construed as advice or used to make financial decisions. Expert financial advice should always be sought and any links contained within this article are included for information purposes only.

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