When you buy a house with a mortgage, you need to put down a deposit. On rare occasions, lenders will lend you the entire buying price, called a 100% mortgage, but not often.
Normally you need to save thousands of pounds before you can apply for a mortgage – at least 5% of the cost of your home. The larger your deposit, the better deal you can get:
Home buyers who put down a 15% deposit can find some great deals. Anyone who has 25% will get the lowest possible rates of interest.
Few first-time buyers can afford as much as this so the government has introduced a temporary scheme for struggling buyers called Help to Buy. Our expert mortgage advisers know about all the deals available for buyers so ask us about it. Our service is fee free.
However excited you are about finding the home of your dreams, you must be realistic about what you can afford.
A mortgage isn’t the only expense you will pay before you can move into your new home. There are extra unavoidable costs when buying a property and you must have enough spare money set aside to cover them.
• legal fees for the solicitor or conveyancer
• valuation or survey fees both for the lender and your own survey
• Stamp Duty which is one of the biggest, use our Stamp Duty calculator to check how much you’ll pay.
These days lenders investigate your finances – your income, your bills, your other debts. And your lifestyle – your dependents and your spending. They have to be sure that you’re not over-stretching yourself. There’s no point setting your heart on a house beyond your means because the lender simply won’t give you a mortgage.
Put as much money as you can afford into a bank or building society cash account every month. Look for one paying the best rate of interest. You can tie up your money for a fixed period but only if you are confident you won’t want to buy a house before the term runs out.