A tenth of first-time buyers expect to have less than £200 left over each month after they have bought their home, research from a mutual found.
According to Yorkshire Building Society (YBS), 5% of new homeowners believe they will have no money to live on after expenses.
Other respondents had more financial wriggle room, saying they would have £752 left over on average after paying bills and essential expenses.
Younger prospective homeowners expected to have the most money left over each month, with respondents aged between 25 and 34 giving an average figure of £802. Among those aged 45-52, the average left over each month was said to be £622.
Nearly two-thirds – 64% – of first-time buyers said they would not be able to save once they bought a home.
Despite this, 55% of potential first-time buyers said they were still attracted to the idea of no longer “wasting money” on rent.
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Ben Merritt, director of mortgages at YBS, said: “What never ceases to amaze us is the determination first-time buyers are showing amidst historic challenges to their right to homeownership, in the form of record-high house prices and the raised cost of living.”
Making sacrifices for homeownership
Some 90% of the 1,000 non-homeowners surveyed and looking to buy a home in the next three years said they would have to make a sacrifice to afford their mortgage.
YBS found that cutting holidays and travel was the most common sacrifice to make, according to 42% of respondents, while 36% said they would limit dining out and 27% said they would reduce buying new tech.
Some 73% of respondents said they would consider a smaller home to make their mortgage affordable, while 65% would think about paying interest-only for a period.
As for the biggest challenge to homeownership, 48% of respondents said high prices.
Merritt added: “Yet again, this latest research shows that they want to own and are prepared to change their lifestyles to achieve it; they simply want to be able to afford a reasonable quality of life as well, which doesn’t seem like too much to ask from where we’re standing.
“Although nothing is certain in a volatile market like the one we’re continuing to experience, and we are seeing ongoing fluctuations in interest rates, we hope that they will continue to settle out overall and this will help ease one problem for first-time buyers, which is meeting their monthly mortgage payments.”
Merritt said the differences in the financial resilience of potential first-time buyers presented an opportunity for lenders to educate borrowers and help them manage their budgets.
He said this called for more measures to help prospective homeowners.
Merritt added: “This latest cry for help is a clear sign that we need to take a holistic look at all the factors at play and ask what else can be done by the industry at large to ensure owning a home is the start of a positive new life chapter, as it should be, and not a shackle stopping people from enjoying it to the full.
“Buying a home is a big commitment that should be taken seriously. People do need to be realistic and set their budgets accordingly, and to some extent it’s about weighing up short-term sacrifice against the clear long-term gain of owning their own property.
“However, we don’t believe buying a home should mean forgoing all of the things [that] make life worth living.”
