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How much deposit do I need to buy a house?

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If you can’t afford to buy a house outright, you’ll need a mortgage. The more money you save up the better the deal, generally. But how much should you save up? It’s tricky to know where to start when it comes to buying a house.

To apply for a mortgage, you’ll probably need to be at least 18 years old. However, the average first-time buyer is 32-years-old.

The first step is searching for the best deals online.

The bigger the deposit you put down, the smaller your loan and the cheaper your monthly repayments.

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Offering a bigger deposit makes you a less risky candidate for lenders and they will generally offer you a lower interest rate.

You also have a better chance of being accepted by the lender if you can offer a larger deposit.

If you own more of your home, the less likely you are to fall into negative equity when you owe more than your property is worth.

This makes it easier to move house or switch mortgage.

How much deposit do I need to buy a house?

The lowest deposit that will be accepted is five percent of the property value, also known as 95 percent mortgages.

Having one of these makes your options very limited though, because lenders prefer to have at least 10 percent of the property value as a deposit.

And right now amid the ongoing coronavirus pandemic, many lenders are only offering mortages of 80 percent Loan To Value (LTV) – meaning you’d need to stump up 15% of the property price as a deposit.

According to Money Super Market, the average deposit for first-time buyers is £50,174. This is roughly 18 percent of the value of the properties they buy.

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How much you’re able to borrow depends on your circumstances.

Single applicants are normally able to borrow four times their annual salary.

Joint applicants are usually able to borrow about three times the joint salary or four times the first salary plus the second salary.

They will also factor in your income, debts and outgoings such as bills and childcare.

The cost of your mortgage depends on how much you borrow, the interest rate you borrow at, and how long you are borrowing for.

The best way to find out what you could borrow and other information is through using a mortgage calculator. 

The Money Super Market Calculator will tell you how much you can borrow based on your income and circumstances.

It will also reveal how much you will need to pay back every month based on this figure.

You can use the Repayment Calculator to find out how much your repayments would cost.

There is also a Stamp Duty Calculator, the Overpayment Calculator, Base rate Calculator, and the Payment Holiday Calculator.

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