How Much Deposit Do I Need For A First Time Buyer Mortgage?
If you’re thinking of taking the plunge and diving onto the property ladder you’ve probably got a lot on your mind. From the excitement of the prospect of owning a home of your own to the more daunting emotions of navigating the property and mortgage market, at Derngate Wealth Management we understand that you’ll have plenty of burning questions.
One key thing you may be wondering is how much deposit you need as a first time buyer?
After all, you’ll want to know how much you can afford as this will influence your decision on what sort of property to look for, and whether you can afford to buy in the first place.
How much deposit do I need?
As a general rule, you need to save between 5% to 20% of the cost of the home you would like.
The more money you put aside for a deposit the more mortgage offers that will become available to you. If you want a cheaper mortgage, it’s certainly worth saving around the 20% margin, or even more if you can afford it.
The absolute minimum is 5% – it is typically very difficult for a first time buyer to secure anything less than that.
How to save for your deposit
- Look at ways to reduce your living expenses.
If you really want to get on the property ladder, but saving for the deposit is proving difficult, you could take a look at your current expenses to see if there are any areas you could save and put some extra money aside.
- Be realistic in working out how much you can afford to pay.
This applies to your deposit as well as your mortgage repayments. Seeking an ‘agreement in principle’ from the lender, will help you determine your maximum offer price when you find a property.
When offering you a mortgage a lender will factor in your monthly expenses. You’ll need to budget for council tax (your estate agent should be able to tell you what this is), utility bills, food, insurance and luxuries and take into account furnishings, renovations and decorating costs. Things like transport costs can really add up, so if you want to free up more money each month to try and increase your chances of securing a good first time buyer mortgage rate, purchasing a property close to where you work and local amenities can really help. Although properties that are positioned in well connected locations can be more expensive, if you shop around you should be able to find something that suits your requirements and budget.
- Get financial advice
If you’re struggling with a poor credit score or financial situation, getting professional financial advice can really help give you clarity and get you one step closer to bagging your first property.
Buy to let mortgages are not regulated by the Financial Conduct Authority.