Ballpark deposit?

gt568

I've never owned a house before so please be gentle with me, and the whole process is a big unknown to me...:o

Whats the sort of ballpark deposit I would need to get a mortgage these days as a first time buyer? 5, 10, 15, 25%? I've heard so many things and I just want a rough amount to target....

Hope this makes sense...

dwsjarcmcd

Dependes on your credit history but generally that 10% is the bare minimum. Obviously the higher deposit the better as you will get better rates.

nearlyrich

My DD is a first time buyer the best deals started at 15% deposit for her.

Lifes_Grand_Plan

You would "need" minimum of 5% deposit to get a mortgage, full stop.

However the more deposit you have, the better the deal you will get and with house prices stagnant or falling, taking the extra time to save a bigger deposit might be prudent.

gt568

So 15% of the property value would be a good target assuming my credit history was good?

brit1234

gt568 wrote: »

So 15% of the property value would be a good target assuming my credit history was good?

Probably not, 20% is a lot better. I think interest repayments on 15% are still high.

Check the various lenders as the use various different benchmarks for interest rate changes. Some banks use 20% deposits as the next interest rate changes, whilst some have got nothing between 15%-25%. The higher deposit the better.

However whilst you save that extra 5% house prices will be falling so it will take quicker than you think.

originalmiscellany

Generally, it appears that the best deals are for around 35% - e.g. you're borrowing 65% of the value of the house. I personally think that house prices are going to drop for the next 2 years at a slow rate, and you'd be better off amassing as big a saving deposit as possible if that's an option to you.
As Brit1234 said, some people are predicting house falls of a few per cent to 10 percent this year, which will wipe out your deposit if you're not careful

gt568

originalmiscellany wrote: »

As Brit1234 said, some people are predicting house falls of a few per cent to 10 percent this year, which will wipe out your deposit if you're not careful

How would a fall wipe out my deposit? Surely only a rise would do that?

Yorkie1

gt568 wrote: »

How would a fall wipe out my deposit? Surely only a rise would do that?

Perhaps a better way of explaining it is that the risk of negative equity is higher / your equity in the house is wiped out.

For example, you have a 5% deposit on a £100K house, i.e. £5K. You owe the bank £95K.

If the value of the house rapidly falls to £93K, your £5K deposit / equity has been wiped out. You wouldn't get it back if you tried to sell (in fact, you'd owe the bank even more money).

DVardysShadow

gt568 wrote: »

How would a fall wipe out my deposit? Surely only a rise would do that?

A fall wipes out your equity [and possibly more besides] after you have bought. A rise devalues your deposit [in % of house price terms] before you buy.

Lifes_Grand_Plan

gt568 wrote: »

How would a fall wipe out my deposit? Surely only a rise would do that?

I think he means once you have purchased, the fall would wipe out the deposit that you put down...

Rather than your deposit that you have saved up (before you buy) in which case you would be correct.