Probably the most concerning aspect of purchasing a new property for most buyers is collecting the required deposit to make the purchase a reality. Mortgage deals are very varied, and the deposit that you can afford can make a large difference to the deal that you receive.
How Does Your Credit Rating Affect Your Deposit?
The deposit required depends upon the severity of your credit. If your credit is very historic, a 5% or 10% deposit might be sufficient, however typically, lenders will require a minimum of a 15% deposit.
Why Save a Bigger Deposit?
Saving a bigger deposit certainly carries with it a number of benefits. These include.
Cheaper Mortgage Repayments – Put simply, the bigger the deposit, the smaller the loan and monthly repayments will be.
Reduced Risk – The risk of falling into negative equity is immediately negated, as you own more of your property.
Better Mortgage Deals – Lenders are more likely to give you more competitive deals, if you are able to afford a bigger deposit.
Better Mortgage Chances – When lenders conduct affordability checks, having larger monthly repayments means that you may fail checks. Putting down a larger deposit can help to prevent this.
What Do You Need To Consider?
When you are saving for a deposit and working out how much you need, there are two important considerations.
Property Prices in the Area – Many people forget to take into account the effect that areas have on house prices, but it is important to get a rough estimate of the effect of this from your local estate agency.
What You Can Afford in Monthly Repayments – Your own finances need to be in order and strictly assessed before you even consider placing a deposit. Consider what you can realistically afford in monthly repayments.
If you have a property in mind and know its valuation, please use our online calculator to work out how much deposit you may need in order to purchase the property.
Please note that our calculators are an estimate and we cannot guarantee that the amount calculated will be applicable in your circumstances. If you would like to discuss your needs in more depth with one of our mortgage advisers, then please get in touch with our team.