How much deposit for a mortgage First Time Buyer?

What is the average deposit for a First Time Buyer?

That’s tricky to answer because it really depends on the area where you’re looking to buy. If you’re further out from the main cities, you can usually buy properties much more cheaply than in a city centre.

It’s about exploring the areas you are considering, looking at prices and what 5% of that would be. Very generally, it’s unlikely you could look at anything without £5,000 to £10,000 as a starting point.

Can I get a 0% deposit mortgage as a First Time Buyer?

Generally, no. From time to time, products come out to support First Time Buyers. A lot of terms and conditions are attached to these and it can be difficult to meet those.

I would work on the basis that you’ll need 5%. But it’s still worth keeping an eye out for schemes or particular products that might help you.

Should I save for a bigger deposit? What are the advantages of a larger deposit?

You might think the obvious answer is yes, save for a bigger deposit. Certainly, the bigger the better when it comes to deposits. You’ll probably have an easier underwriting process with the lender, because a bigger deposit means you’re less risky to them.

You might have a sufficiently big deposit that you qualify for lower interest rates. It depends on the figures.

However, sometimes people decide not to buy until they have 10% or 15%. But if that’s going to take you years to do, it might be better to buy with a smaller deposit and just get on the property ladder.

Once you’ve got a property, it will hopefully rise in value over time. You’re paying off the mortgage as well, so things start to get better. It’s possibly better to be in that position than waiting another couple of years to get to 10%.

How much can I borrow as a First Time Buyer?

Years ago, people used to talk about salary multiples. Parents of our current First Time Buyer generation might still refer to a mortgage as being four or five times your salary.

But the reality now is that each lending house has its own criteria to calculate affordability. They’ll take into account a lot of different factors – such as income, credit commitments, your age and whether you’ve got children.

They might be interested in how your contract’s structured. If your income is made up of basic salary and commission, they’ll view that differently. How much you can borrow is not a straightforward thing and can vary greatly from lender to lender.

This is one way that an advisor can really benefit First Time Buyers. We make sure that we go to the right lender for your circumstances – to get the most borrowing, for example, if that’s what you need.

Are there any other costs associated with a mortgage?

This is a good point, because aside from saving up the deposit, there will be legal costs. Depending on the value of the property, there will also potentially be tax, now known as land and buildings transaction tax, which has replaced stamp duty.

You’re also likely to have an advisor fee. I won’t put figures on this because it varies depending on how much you’re spending and location. But those costs need to be factored in so that you’ve got money to cover them.

How can a mortgage broker help here? Have you got anything else to add?

If you’re doing this for the first time, it’s quite daunting. There are many things you won’t have experienced before. An advisor you feel comfortable with can be a great sounding board – to make sure that you’re not missing things, your budget is correct and you’re realistic about what you might be able to borrow and what you can afford in the long-term.

We act almost as a mentor for you, beyond just securing the finance – and that is invaluable.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.