Do I Need A Deposit And A Mortgage To Buy A House? Probably - RiteMortgages

Do I Need A Deposit And A Mortgage To Buy A House? Probably

How big a deposit do you need to buy a house and get that freedom and independence from landlords…? Well it depends.

You might have heard people talk of 100% mortgages or Guarantor mortgages but they don’t really exist anymore. If you don’t have a house to sell with equity (the difference between a mortgage and the sale price) you could be lucky and have a deposit “Gifted” from a family member, usually from the “Bank of Mum and Dad”. Typically the bigger your deposit the better the deal or mortgage rate you will be offered from the lenders.
Deposits are measured as percentages as part of the Loan to Value (LTV) calculation. If you have a deposit of 10% of the purchase price, you need to borrow 90% of the purchase price via a mortgage. The lowest deposits and highest loan to values are 5% deposit and 95% mortgages but you need to have a good credit history and your affordability calculation (how much you can afford to pay to your mortgage) needs to be spot on and not a stretch.
With every 5% or 10% increase in deposit you can afford to put down you should get a better rate and even save on lenders fees. If you have had less than perfect credit in last few years its more than likely you will need a deposit of 15% of the purchase price to qualify for an 85% Loan to Value bad credit mortgage.
So you know the size of your deposit will make a massive difference to the mortgage deal you can qualify for. A bigger deposit gives you more options and lower rates. Plus, the bigger your deposit, the smaller your loan.

So how can you get the biggest deposit possible? Well if you aren’t lucky enough to have a family member gift you the deposit or unlucky to have received inheritance and you don’t have another property to sell, we have to save.
Luckily there are tax free savings vehicles called ISA’s that can be used for this purpose and there are a manner of budget tips available to help you get started. Sacrifices will have to be made but with determination and a bit of planning you can create that feeling of freedom and space that comes with owning your own place.
Disclaimer – This does not constitute financial advice. Please speak to a professional adviser for information specific to your needs and circumstances.
Call Us Now