Can you Stretch to the Deposit?
This is the question isn’t it? You might well be able to afford the monthly repayments, but can you scrape up the required deposit in order to buy your new home?
With house prices inevitably rising as time passes, deposits are also increasing. It’s really important to know that you have at least the minimum deposit. The more you can put down, the more choice of lenders you will have.
In almost all cases, you will need a deposit of at least 5% of the property price. That said, the average for a first time buyer in the UK is around 15%. The bigger the deposit, the lower your mortgage interest rate and the smaller your monthly repayments. The loan is considered a lesser risk with a higher deposit amount.
Other Home Buying Options in the UK in 2021
On 3 March 2021, the Chancellor announced a new mortgage guarantee scheme for first-time buyers and home movers. The scheme will involve the government offering a guarantee to banks to encourage them to offer 95% mortgages, helping people buy a home with a 5% deposit. The scheme will run from April 2021 to December 2022, with new and existing properties priced up to £600,000 all eligible.
Read more: about the new home buying scheme.
Now is the time to take advantage of this offer if you are serious about buying a new home. Sometimes these government schemes are continued after the end date but home buyers tend not to know until the very last minute.
It’s actually fairly unusual these days to find a 95% mortgage deal.
Mortgage Interest Rates
Mortgage rates are forever changing meaning that the right deal for you might not be the one with the cheapest rate right now. You’ll need to factor in things such as upfront fees, early repayment charges, and minimum and maximum terms. It’s really very important to consider all factors when settling on a mortgage deal.