Help! How much deposit do I need?
David Lauder tells us all about mortgage deposits and explains just how much you really need.
I often hear people talking about how they just can’t get a mortgage because they don’t have a big enough deposit. When the property bubble broke it was true that a larger deposit was needed, but in today’s market you typically can get a mortgage with a 10% deposit. Of course this is dependent on meeting the mortgage providers lending criteria.
The more you have, the less you pay
The interest rate that the mortgage provider will offer, will gradually reduce with every additional 5% you can add to your deposit until you have a 40% deposit where you become eligible for the mortgage lender’s most competitive deals.
It’s certainly changed days as provider’s now reward customers with how much money they can bring to the table as opposed to how much money they earn.
Rates are very favourable
Rates in general are very favourable at present. Even with a deposit of 10% you will still get offered something with an APR of less than 5%, which in normal market conditions would be deemed a very good deal. With bigger deposits there are deals available around 2.5% which makes monthly repayments much more affordable.
Need a little help?
There are a variety of schemes available to which you may be eligible for, that have been designed especially for people who will only have a 5% deposit. The Help to Buy: mortgage guarantor scheme can help you purchase an existing property, whilst the Help to Buy (Scotland): equity loan scheme is available if you are looking to purchase a new build property.
And remember affordability is key! You don’t need to have 25% deposit to be eligible for a mortgage at a decent interest rate, but you do need to be able to afford the payments on an ongoing basis.
To find out what you may be eligible for please contact me or pop in for a chat.
David Lauder is Mortgage and Financial Planning Consultant who helps clients find the most suitable mortgage solution tailored to their circumstances along with identifying any other gaps they may have in their finances.
Call him on 07810 522 422.
Read some of David's other articles
- Predictions for mortgages for 2014
- What is an offset mortgage?
- Affordability, how much can I borrow?
- Christmas budget planning
The initial consultation with an adviser is free and without obligation. Thereafter, ESPC Mortgages charges for mortgage advice are usually £350 (£295 for first-time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED AGAINST IT.