The Question ….

I have managed to save up quite a bit of money now, but I’m not sure it’s enough as a deposit for me to buy an apartment that I have seen for sale. I have £10,000 saved and the property is for sale for £156,000. Is this enough? How much deposit do I need to buy this property?
— Heidi from Dover, Kent

The Answer ….

The general rule of thumb for a deposit when buying a property …

Heidi, the general rule when buying a property, is the bigger the deposit the better – simply because you will get a lower interest rate and a greater range of mortgage products available to you. However, you should be able to secure a mortgage with a deposit as little as 5% of the purchase price E.g.

The property is for sale at £156,000 you will need a minimum of £7,800 (5% of the purchase price) to put down as your deposit. Therefore if you have £10,000 saved already, then you will have enough deposit for a 95% LTV (Loan to Value) mortgage!

There is however, a greater choice of mortgage available if you can obtain a 10% deposit (in your case £15,600)though, and the underwriting is sometimes a little less strict.

There are some specialist schemes where a mortgage lender will use a parent or grandparents property as security instead of you putting down a cash deposit – these are not very common though, and are a bit more complex than a standard mortgage. Your parents or grandparents would need to seek independent legal advice too as they would be securing borrowing against their home as well as your own.

Book an Appointment with a Mortgage or Financial Adviser

You are always best to seek independent financial advice from a mortgage adviser or broker or a financial adviser. These people are the experts when it comes to mortgages and will be able to help you secure a Mortgage in Principle


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