How much deposit is required?

Choco1208

Hi

I'm currently trying to save up for a deposit to purchase a house, hopefully by mid next year.

I'm already looking at properties on the Market, to get a rough idea of what is available, the pricing etc.

I have seen a wondrful house I would love to buy (damn, I wish I had more savings), and it Is priced £144,950.

How much deposit would I need to put towards the house. I understand the more I put towards the deposit the more better, however, what would the minimum be.

Thank you so much in advance.

I really don't have much knowledge of buying, hence trying to seek more knowledge....

Please share ur experiences if ur also a first time buyer in a similar boat to me.

XxxxxxxxX

Choco1208

Oh and a local estate agent called me wanting to arrange an appointment to speak to a financial advisor. I've informed them that I'm looking to buy a house within 12 months. They keep calling now. They have said they have a January sale coming up and with my savings of £6000, I can already buy a house. Which surprised me.

I said I would call back. Is it worth the visit?

And, surely a 6k deposit is to less during this period...

kingstreet

Do not get involved with estate agency advisers. One of the biggest firm's mortgage service works like this;-

- you pay them a fee
- they also get commission on any mortgage they arrange
- they have a limited panel of around just ten lenders
- tied to one life company
- will try to sell you their expensive conveyancing service
- get survey business from their panel as reciprocation for the mortgages.

You'd be better off with a local independent or whole market broker who doesn't work to a panel. If you pay a fee this may see any commission rebated to you if a commission-paying product is recommended.

On the deposit issue, I'd say 10% is the absolute minimum to get you a mortgage today. The bigger deposit the better, with better rates and more lenders to choose from. Don't forget you'll need money for solicitor's fees, valuation/survey and stamp duty.

Get an idea of what you can borrow before you start to look seriously. When you have the deposit you need, get a mortgage agreed in principle so you know you can borrow the amount you need.

BitterAndTwisted

These days, to get a decent rate you will need a 10% deposit as an absolute minimum. There are few lenders offering 95% mortgages these days. The higher deposit percentage you have the better the rate you could get.

PLEASE do not give in to the agent's blandishments to see their advisor. They get a commission on every mortgage product they sell regardless of whether it's the right product for you or your circumstances.

Oh, and another thing not mentioned: the minute you disclose the amount of savings you have and your income the agent will be told exactly how much your upper limit to purchase will be. This is not information which it is helpful to you for the agent to have about you.

Tixy

I'd go to an independant mortgage broker rather than one through an estate agent - I'd decline the invitation and ask them to stop calling you (the january sale bit is a load of nonsense).

I'd think £6k is likely to be too little to buy any property, but certainly too little to buy that one you are interested in. As a minimum I would aim to save for a 15% deposit, but an independant broker could advise you better.

hazyjo

Yes, someone would find you something with a 5% deposit, but the rate will be rubbish. Also, £6k ain't gonna go far when you factor in solicitor's costs, stamp duty, surveys, mortgage fees, removals/van hire, etc... along with anything that goes wrong along the way. You might need addditional money for furniture, curtains, etc, or you might lose your purchase and end up starting again (maybe more than once) and incurring more fees/charges that way.

Keep saving! As above, definitely avoid the EA's advisers, etc. Don't wanna show them your cards...

Remember EAs are basically salesmen who work on commission. They're not your friend, and they will be working for any vendor who's selling, not you (although there are some good ones out there!).

Jx

mrsp80

A quick look on the banks' websites will give you an indication of what they would (in theory) lend you.

Try Nationwide or Santander for an idea. Both are popular choices with first time buyers.

You'll get better rates if you have 20% deposit but that's not essential. Some lenders are offering 95% mortgages.

What you can borrow depends on your income, any debts or financial obligations, and your credit rating.

Hope this helps - good luck.

Choco1208

Wow

Thank you so so much for your replies.

I've already learnt so much from you.

I will continue doing research and also continue saving as much as we can.

Like some of you mentioned, it's not just the deposit we need to save for. There's the fees, furniture etc.

And, I think we have decided that for the meantime we are going to buy a small average house, and then in 5-10 years we will hopefully have more savings and maybe one day move into our idea home...

Thank u for your relies.

Svenena

It will also depend on your income. I'm planning to spend around £140k on a house. A 10% deposit would obviously be £14k, but as I can only get a mortgage up to around £100k due to my income, I will need to save the other £40k as a deposit.

Jeffrey_Shaw

BitterAndTwisted wrote: »

you will need a 10% deposit

That's always been so. P's solicitor will seldom offer less than 10% deposit at exchange- only if P:
a. is receiving an incoming deposit (on a related sale) of <10%; or
b. is borrowing >90% on a mortgage advance.

Jaybo10

As you are saving for a deposit you may find the 'saving for a deposit' thread useful (I can't post the link as I'm a newbie - I'm sure another helpful forumite will pop it up somewhere for you)

Good luck with your saving!