How Much deposit do I need for a mortgage?

How Much Deposit Do I Need For A Mortgage?

Check out how much you need to save as a deposit to buy a home.

The bigger your deposit the lower the interest rate your mortgage broker can arrange for you. In some cases, having a sizeable deposit might be the only way a lender will be prepared to lend at all.

Since the crash of 2007-8, average deposits in the UK have crept upwards as lenders appetite for risk has reduced. More than half of the first-time home buyers now put down a deposit of more than 10% towards their first property. A recent Which survey revealed that the average home deposit is now 17%. But don’t be put off by this, many lenders are prepared to accept much less.

Minimum mortgage deposit

How Much Deposit Do I Need For A MortgageCurrently the minimum cash deposit you will require is 5% with the lender making up the other 95% of the purchase price assuming your income can support this borrowing. Certain lenders are prepared to accept financial assistance from your parents by way of gifted deposits or by guaranteeing the mortgage with a charge over their assets.

If you are buying from your family, many lenders will accept discounted purchase prices as a deposit on the property as long as the property is actually worth more than what they are selling it to you for. Don’t be surprised if the lender still insists that you contribute 5% in cash though. They like to know you have some personal “skin in the game”

Here’s an example of how a 5% deposit worked

Say you wanted to buy a £160,000 property, you would need to save up at least £8,000 and borrow £152,000

Typical expenses associated with buying a home

Based on buying a £160,000 home, these are the expenses you should budget for:

Stamp Duty £700
Legal Fees £950 (estimate)
Brokerage £695 (estimate)
Valuation Fee; £295 (estimate)
Lender’s Arrangement: £495 – £995 (differs by lender)
Telegraphic Transfer £35 (estimate)

Mortgage ID’s expert advisors will explain the home buying system to you where you live and make sure you are fully aware of every aspect of buying a home. They can assess your income and deposit and accurately tell you how much you can borrow. We can even help you find your new home and even work with you to negotiate the best deal from the seller.

Call us for a confidential chat on 02920 394400