Buying your first home can be tough, especially if you’re not familiar with the process and the lingo. It’s crucial to understand your options.
Most first-time buyers need to save up a deposit for their mortgage. Generally, the smaller your deposit, the more expensive your mortgage will be. Pay attention to the interest rates on your mortgage, too, because they add to the overall cost. Usually, you’d need a deposit of about 20% of the mortgage value to make the purchase. This can be intimidating given how high property prices are, but don’t lose hope. With careful saving, it’s definitely doable.
Saving Tips for a Deposit
Saving up for that initial deposit can be challenging, so having a solid plan is important. Start by listing all your expenses to see where your money is going and to identify where you can cut back. Try to set aside some money regularly, even if it’s a small amount; it all adds up. Your mortgage provider will look closely at your finances, including how long you’ve been at your job and your spending habits. Making some sacrifices now will help you save and show lenders you’re serious.
Getting the Best Mortgage Deal
To get a good mortgage deal, aim to save up a 25% deposit. This often gets you a better interest rate. If you can save even more, you’ll likely get even better deals since you pose less risk to the lender. The interest rate you get depends on how risky you appear to the lender.
90% Mortgages
For some, a 90% mortgage, which only requires a 10% deposit, is an option. Just be aware that these often come with higher interest rates. These mortgages can be complex, so it’s worth doing your homework.
Government Help to Buy Scheme
Government programs can also help first-time buyers. With a 5% deposit, you can get started, though you will need to pay back that help eventually. You’ll need to buy a government-approved property, usually a new build, but despite the limits on property choices, this scheme can be a great option for those new to the housing market.