It doesn’t matter what line of credit you are seeking, whether it is a fast cash loan through a broker, a personal loan or a mortgage, it is important that you can demonstrate that you have the means with which to pay back the loan under the agreed terms made at the beginning of the agreement. If you are looking to buy a home in the near future, there are different considerations to make as far as your credit history and the type and size of mortgage that you are likely to be granted. One of the biggest conditions when buying a house is putting down a large enough deposit. The more money you can save to go towards a deposit on a house, the better your mortgage will become.
We all know how hard it has become in recent years for new homeowners to gain a foothold on the property ladder. For many people over the last decade or so, they’ve had to save up between 10% and 20% of the total value of the home they are looking to buy, just to make sure they have enough money down when applying for a mortgage. What can you do to help save for a deposit on a home and make sure that you are gaining the right mortgage for you when attempting to become a homeowner?
Understand the average deposit
There are a few different factors that go into a decision on a mortgage application. When determining how big a deposit you need before making an offer on a property, you need to look at the valuation of the chosen property and the terms attached to the mortgage deal that you have personally. In most cases a deposit will be at least 10% of the overall value of the property you are looking to buy, but it can go up to as much as 40% in some cases. The vast majority of mortgage deposits these days though will be at around the 20% mark.
The money that you put down as a deposit on a property will become your equity. That is, the proportion of the home that you own outside of the mortgage agreement that you have made.
Is it possible to find a mortgage with less than 10% deposit?
It has become increasingly difficult to find mortgages in recent times with the need of a deposit lower than 10%, although there has been talk since the start of 2021 of a return to 95% mortgages, where the mortgage applicant would only require 5% deposit to put down before a mortgage was agreed.
Can I put a larger deposit down?
Remember, the larger a deposit you can put down on a property, the better rates and monthly repayments you’ll get for your mortgage. If you can afford to save more money to put down on a deposit, always look to do so, as it will be better for your mortgage and long-term finances.
Saving for a mortgage
Whatever type of mortgage you are looking for and the size of mortgage you have managed to save, think about how you can go about saving for the deposit. Work out exactly how much money you will need to save and from there you can work out how much money you will need to save each month to reach that target within the timeframe that you want to reach your target. It is achievable with clever management of your monthly finances and a coherent plan.