Almost two thirds (64%) of first time buyers have a second source of income to help them save for a deposit, with this figure rising to 85% in London, a new survey from Ipswich Building Society has revealed.

The earnings from extra work account for two fifths (39%) of a deposit on average. Nearly two thirds (62%) of first time buyers doing extra work claim they would not have been able to save for a deposit without this extra income, while 63% believe it enabled them to purchase a property sooner.

Of those prospective first time homeowners who disclosed a ‘side hustle’, a third (32%) have started a business, half of which were related to their main job, and half starting a venture unrelated to their current employment. 

Charlotte Grimshaw, head of intermediary relations at Ipswich Building Society said: “While an additional stream of income should be applauded, not every first time borrower will be aware this extra revenue may not be taken into consideration for their affordability assessment. For clients with a second income stream we’d be looking for evidence of these earnings, such as payslips, or, for self employment, a tax return. Crucially we need the applicant to demonstrate the additional earnings are ongoing and reliable, in order to be used for future mortgage payments.

“Having a full understanding of your client’s sources of income and being able to provide documentation will enable lenders to get to grips with your case faster. The trends we’ve seen in our research look only set to increase as house prices continue to rise, thus demanding bigger deposits, and so more first time buyers are drawn down the side hustle route. Of course, first time buyers, and anyone else with a side hustle for that matter, should check with HMRC about what constitutes additional income and when this needs to be declared for tax purposes.”

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