Obtaining a mortgage and buying your first home can be quite a daunting experience but how much do you need to save up for a deposit to buy a house?
House deposits are usually between five and 20 percent of the cost of the property, which for first time buyers can be an unprecedented amount of money.
When it comes to how much mortgage you can afford, this will depend on how much you earn per year and the condition of your credit report/score, i.e. if you have any bad credit issues, this might affect the amount you can borrow, although it is definitely still possible to get a mortgage.
Although some people successfully secure a house with a five percent deposit, in the current economic circumstances it may be a good idea to try to save up a bigger deposit than this, The bigger your deposit, the lower your mortgage interest rate, and the smaller your monthly repayments.
It’s really difficult to save the amount of money required for a deposit especially if you can’t rely on the bank of mum and dad.
It’s harder now than it has ever been, as one of the immediate consequences of the Covid outbreak last spring was the withdrawal of the highest loan-to-value (LTV) mortgages, as lenders scrambled to reduce their risk exposure, therefore making it harder for first-time buyers to get on the property ladder with five to 10 percent deposits. Back then, nine out of 10, 90 percent mortgages were taken off the market, and 95 percent mortgages all but disappeared.
Now, as the banks start to relax a bit, the 90-percent mortgages are starting to reappear but having a deposit of 15 percent gives first-time buyers access to better mortgage rates.
If you are looking to buy your first home it would pay you to talk to a mortgage advisor, at Asset Harbour we have a highly experienced team of mortgage advisors that keep on to of everything that is going on within the mortgage industry and as whole of market brokers can point you in the direction that is best for you.