How much will I need to save? Typically, you’ll need to save at least 5% of the cost of the home you want to buy to get a mortgage. So if you want to buy a home costing £125,000, you’ll need to save £6,250. The larger the deposit you can save, the cheaper the mortgage you can get.
How much will I need to save?
Typically, you’ll need to save at least 5% of the cost of the home you want to buy to get a mortgage. So if you want to buy a home costing £125,000, you’ll need to save £6,250. The larger the deposit you can save, the cheaper the mortgage you can get.
You’ll also need to save for the other costs involved with a house purchase such as:
- mortgage arrangement and valuation fees
- Stamp Duty
- solicitor’s fees
- survey cost
- removal costs, and
- initial furnishing and decorating costs.
Finding the right mortgage for you
There are literally thousands of different mortgage deals to pick from, so choosing the right one for you can be tricky. Which option is best for you depends on, for example, whether you want the security of a fixed monthly repayment which will appear artificially higher, or whether you are happy to opt for a variable rate and accept the implications that it may be cheaper initially but will get more expensive if interest rates rise. Put into context that interest rates have been historically the lowest on record for the last few years then the law of probability dictates that interest rates will only go up at some stage.
You can do some of the research yourself at the start but it’s a good idea to talk to an independent mortgage broker
First time buyer schemes
There are a number of government schemes aimed at giving first-time buyers a helping hand onto the property ladder.
For example, shared ownership schemes are aimed at those who want to buy a home but can’t quite afford to. With some schemes, you buy a share of the home and pay rent on the remaining share while on others you buy a share of the home and receive an interest-free loan from a housing association for the remainder.
And the new Help to Buy scheme, which offers an initial interest-free loan of up to 20% of the value of a newly-built property.
Alternatively, if you’re buying a newly-built property in England you may also be able to get help with saving a deposit under the NewBuy scheme.
If all else fails…using a guarantor
If you’re struggling to get a mortgage to buy your first home you might want to consider a guarantor mortgage. This means that a parent, guardian or close relative agrees to be liable for the mortgage payments should you be unable to meet them.
Guarantor mortgages shouldn’t be entered into lightly as they are legally binding arrangements and your guarantor needs to be able to afford to pay your mortgage if you get into difficulty.
Again, you’ll need to talk to an independent mortgage broker to find out more about first time buyer mortgages.
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