If you're looking to take that first step onto the property ladder and buy your first home, then you'll need to know how much of a deposit you are expected to have, especially if you're wondering "how much deposit do I need?" already.
The deposit is the amount of money that you are expected to put towards the house from your own savings. The rest of the money is provided by the bank through a mortgage, which is then repaid over a very long term (20-35 years, or sometimes even more).
Saving this money can be tricky, particularly when you are already paying rent on a flat or house. However, with a little bit of discipline and by taking advantage of a few government schemes that are in place to help you get there, it's possible to take your place on the property ladder. In this article, we'll explain how.
The amount of deposit you require will vary depending on your bank, the property you are looking to buy and how good a mortgage deal you are trying to secure. Your deposit can be as little as 5% in some circumstances, but you should expect to pay a higher rate of interest on the mortgage as a result of going for this deal. In order to get the best mortgage rate, you should be looking towards a deposit of 20% or even more. This is often out of the reach of first-time buyers. If this is the case for you, then you should continue to save even after you have bought your first property as this will allow you to substantially reduce your monthly repayments the next time that you move house.
At the moment, the government offers a savings product known as a Help to Buy ISA. This offers many of the features of a regular ISA but with the added bonus that the government will top up whatever you have saved by 25% when the time comes for you to buy a house. This is a very good offer and there is no reason not to take advantage of it if you're considering purchasing a property. Even if you are not planning to make the move for quite some time, it's worth looking into a Help to Buy ISA now as the amount that you are allowed to put into the ISA each month is limited. By starting now, you will have the largest possible pot available to be topped up by the government when the time finally comes to make your move and buy a property.
The thought of putting together a balance of £20,000 or more can seem like a daunting prospect but it's worth taking a look at your daily outgoings and seeing if there are any small changes you can make. Knocking £5 off your daily expenditure will mean that you'll have around £1,500 extra saved at the end of the year. A few examples of things that you could change in order to boost your deposit include
Hopefully, this guide has shown you that it's easier to put together the deposit for a house. The first step is to understand exactly how much money you will require and then put together a plan that will help you to get there. The way to a deposit is one small step at a time - it may be a long journey, but it will be far easier to get there if you're sure of the destination.
read our useful guide to getting your dream home.