Saving for a Deposit
The prospect of saving up for a deposit whilst paying your rent, bills and other outgoings can seem near impossible. Don’t worry you are not alone; this is the same barrier everyone faces when buying their first property. Unfortunately, the faster house prices rise the more out of reach your deposit requirement will be.
There are a number of schemes in place for people who are saving up to buy their first property such as help to buy ISA’s and shared equity schemes to make the deposit target lower and easier to achieve.
The key is the sooner the better and the more you can afford to put away the better as those with greater deposits get access to cheaper mortgage products.
Aim for 10% of the home report value of properties that you are considering and don’t pay too much attention to the ‘Offers Over’ price as it is likely the property will cost more than that and you won’t be in a position to meet the deposit requirements.
If the market is very active then you may end up having to pay above the home report value. Remember that any amount above the home report value will have to paid for outside the mortgage product.
Use our simple Deposit Calculator to calculate how much you might require.
Remember there are other costs that you must consider when buying a property such as Land and Buildings Transaction Tax, Solicitors Fees, Moving Costs etc.
You might be in a position where a relative will be assisting you with your deposit. If this is the case saving up the required deposit will be much easier to do. There is however usually additional paperwork to go through if this is the case and solicitors may charge you more to deal with this.
The purchase of a property is generally the biggest expense that we make in our lives and having a suitable deposit can save you a fortune over the course of the mortgage in interest payments.