How much deposit makes a difference

dj0586

I'm currently renting a property with my partner which we love, and if a similar property on this street came up we would love to buy.

The problem is we are bother earning 22.5k a year and have no debts which accoring to mortgage calculators gives us between 150k and 175k. Last year one went for 220k.

I have saved 10k as a deposit, do i need to save up to make the difference or would the amount of deposit increase the offer.

If so how much deposit would i need to get 220k. Hope this makes sense.

wannabedebtfree_2

I think the answer is basically as much as possible!

Lenders will happily lend money to people who have a sizable deposit - as obviously they are taking less of a risk.

I would speak to a mortgage IFA who will be able to give you some figures, I wouldn't have thought you have to make up the gap, as long as you have a chunk of your own, for £220k 10% deposit would make a massive difference to the offers you get.

ajaxgeezer

It's not just the amount of deposit, but the income multiple too. Try the Abbey, they had the most "generous" multiples when we were looking to buy. Where Natwest would offer £140k, Abbey offered £214k. Both of these figures were based on a 10% deposit.

EDIT - if your fees/stamp duty are coming out of your deposit money then you'll need at least £5-6k extra just to satisfy the 95% LTV some lenders use as a higher lending charge threshold.... often a lender would use 10%, meaning you'd need another £17k or so for a deposit.

Like has been suggested, talk to a whole-of-market, fee free (to you) mortgage advisor. They are much better with this than anyone else, and it won't cost you more than a cup of tea.

lynnexxxo

I'd suggets that if you had a 10% deposit, you would be able to find a company to loan you 200k.

However you would have to factor in stamp duty, legal fees etc into your budgeting.

200K mortgage @6% = £1300 a month.

Maybe consider looking for a cheaper house nearby?