What the first-time buyer age crisis means for contractors

Buying your first home used to be something people did in their late twenties. If you had a strong income and a professional career behind you, maybe even earlier. Not any more.

The average age of first-time buyers in England has risen from 32 prior to the pandemic to 34 today. That’s according to the latest English Housing Survey. In London, the average is higher still, at 35.

Skipton Building Society’s home affordability index shows the long-term shift in even sharper relief. It puts the average first-time buyer age at 34, up from 29 in 1994. That’s a 20% rise in a generation and a half, and that trend shows no sign of reversing.

For contractors and independent professionals, there’s an extra layer of frustration. Because for many, the delay isn’t just about saving a big enough deposit. It’s about the persistent misconception that’s been quietly holding them back.

Why contractors think they need more deposit than they do

One of the most persistent myths in the contractor mortgage market is that contractors need a bigger deposit than salaried employees. They don’t. A genuine contractor mortgage from a contractor-friendly lender treats contractors like any other homebuyer.

The myth has roots in the pre-credit-crunch era of self-cert mortgages, when contractors often had no choice but to self-certify their income. Interest rates on those products were high, and the most effective way to reduce them was to put down a larger deposit. Word spread, the idea stuck, and for many contractors it simply never got updated.

The reality today is very different. The lenders we work with assess contractors using contract-based underwriting. That means they calculate affordability based on your annualised gross day rate rather than years of accounts.

Using your day rate accurately reflects your earning capacity. And on that basis, a contractor can often borrow as much as (or more than) a salaried employee on a comparable income. Moreover, they face the same deposit requirements as any other buyer.

A 5% deposit will get you through the door. A 15% deposit will secure a competitive rate with many of our lenders. You don’t need 25% or 30% to compensate for your income structure. That’s not how specialist contractor mortgages work.

Why the broader first-time buyer picture still matters

That said, the wider forces pushing the average buying age higher are real. Sadly, contractors aren’t immune to them.

Private renters now spend 39% of their income on rent, compared with 19% for those with a mortgage. Saving for a deposit while meeting that monthly commitment is hard going for everyone. Whether you’re a limited-company contractor or a PAYE umbrella worker, you’ll feel the effects.

First-time buyer deposits now average out at £36,500. 59% of buyers put down less than 20%; 16% found less than 10% deposit.

Buying alone has become increasingly difficult too. 52% of today’s first-time buyers need two or more full-time salaries to buy their home. That’s up from 40% in the mid-nineties. And just 6% of first-time buyers are under 25, compared with 23% thirty years ago.

Geography also shapes the picture significantly. Research from My Home Move Conveyancing analysed more than 39,000 transactions. It found that the South East has seen the steepest rise in the first-time buyer age, up by three years since 2021. Conversely, the East Midlands has remained relatively stable. Cities such as Leicester, Derby, and Nottingham continue to offer more accessible entry points.

The case for a bigger deposit: figures that suggest saving more makes sense

We’ve established that contractors don’t need a larger deposit than other buyers. But there remains a genuine financial argument for building one where circumstances allow.

When lenders consider a mortgage application, risk is at the forefront of their assessment. A borrower with a 25% deposit is a much lower risk than one with a 10% deposit. That difference is reflected directly in the interest rate a lender will offer. Moving from a 90% LTV mortgage to a 75% LTV mortgage can unlock a materially better rate. And that difference compounds significantly across a 25- or 30-year term.

A larger deposit also means borrowing less over the term of the mortgage. This commitment reduces the total interest homeowners will ultimately pay, even before accounting for the benefit of a lower interest rate. Plus, it provides an equity safety net should property values dip in the early years of ownership.

Almost two-thirds of first-time buyers—62%—are now taking out 30-year mortgages. This extended term is simply an exercise to make monthly payments more manageable. A larger deposit can shorten that term and considerably reduce the overall cost of borrowing.

The key point for contractors is this: the decision about deposit size should be a financial one. You should make it with a clear understanding of what each threshold means for your mortgage rate. You shouldn’t let the belief that your income structure demands more of you drive your decision.

What working out the right deposit means in practice

If you’re a contractor first-time buyer, the starting point is understanding your actual borrowing position. It’s not the position that mainstream lenders or outdated assumptions might otherwise suggest.

Our specialist lenders understand your contract rate, payment structure and working history. They’ll assess your mortgage affordability based on your genuine earning capacity. From there, we can show you exactly what deposit level moves you to the next LTV bracket. With that information, you can decide whether the rate improvement justifies extending your saving timeline.

We work with first-time buyer contractors across all income structures: limited company, umbrella, even PAYE. If you’re on the cusp of buying your first home, let’s have that chat before you assume the barriers are bigger than they are.