Frightening statistics have just been published by Scottish Widows Bank after extensive research. One in eight retiree’s, equating to over 1 million people, will be renting by 2032 – treble today’s figure. It’s data shows that over 50’s renters are not saving anywhere near enough to cover their rental costs in retirement, leaving a £43 billion shortfall.
The average renter planning to retire in 15 years time would need to save an additional £525 every month into their pension – £6,300 a year on top of their current contributions or work an additional 5.1 years to cover growing rental costs in retirement. This reinforces how important it is to buy a property whilst you are young so that is paid off by the time you retire.
We all know how difficult it is to save the deposit for your first property, but with lenders offering mortgages with deposits as low as 5% and with the government supporting low cost housing with the Help to Buy scheme and other schemes like shared ownership this is an excellent time to consider buying. Even with the bank of England raising its interest rates there are still very attractive low monthly cost fixed rates available. Many lenders are prepared to accept gifted deposits from parents or close relatives to help towards the purchase of a property. The bank of mum & dad is being used more and more often, sometimes gifted as an early inheritance.
Today with rental costs being so high and rising, it is often cheaper to be paying a mortgage than renting and there are moves afoot by MP’s that rental costs should be taken into account when a lender assess’s affordability. We would all like to be able to buy a beautiful property to live in, but sometimes that is not possible when it’s the first property and incomes are lower. But you have to start somewhere with a smaller and less expensive property, with the view to moving up the property ladder in years to come. So the signs are clear, start as early as you can to avoid disappointment later in life even if your first property is not your dream home.
Hope this helps,
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