Have you thought about the deposit needed for a property?
Many people aspire to own that dream home. We are inundated with property programmes and DIY tips and Pinterest pictures of perfect homes to help us bring our own personal dream to life.
Evergreen Mortgages are here to help you put that dream into reality! We can help you plan out how to achieve that dream, even when it seems difficult to imagine.
Part of this comes down to the issue that saving for a deposit for a mortgage can be a huge challenge. Whether that is due to having no money left to save after rent and bills, or the rising house prices leading to bigger deposits being necessary, owning your own property can feel like it might not be an option for a long time.
However, it doesn’t have to be that way. Home ownership is possible with Evergreen Mortgages!
If you don’t have the money for a deposit, or aren’t in the position to be able to save for one, we can help you. Today we’re going to be discussing how much you need, ways you can still get on the property ladder with a smaller deposit, and some tips on how to prioritise saving.
How much do you need for a deposit?
The deposit for a house usually begins from as little as 5% of the purchase price of the home.
With a deposit of 5%, this relates to an ‘LTV’ or ‘loan to value’ mortgage of 95%. For example, if you were looking to purchase a property listed at £300,000, you would need a deposit of at least £15,000.
The rates on offer to you are based on your loan to value, and these LTV brackets are generally in 5% increments, so for each further 5% you have in deposit you access more lenders or better rates.
More complex situations may require larger deposits.
What if you haven’t got that money? What are your options?
If you haven’t got enough money saved, or any, there are still ways that you can get yourself on the property ladder. These may be more complicated to obtain, and may need specialist adviser help, but don’t give up hope yet!
Gifted deposit
The bank of mum and dad… Or whoever that may be! Gifted deposits are an option, and there are lenders that can accept deposits from people other than family members, although generally they do prefer deposit funds to be gifted by parents, siblings or grandparents. Any gifted deposit amount (even if the money is now sitting in your account ) must be disclosed to your broker and your solicitor.
They will need to do the necessary checks to determine where the funds are coming from. Similarly if you’ve given mum money to hold for you to help you save, you may find that the lenders now consider that money hers, so despite it coming originally from you, this would be classed as a gifted deposit.
Concessionary purchases
A concessionary purchase is when you have a family member or perhaps a friend or landlord who is prepared to let you buy a property from them at a discounted price. Providing they are happy to complete the gifting paperwork, then there are lenders who can proceed using the discounted amount as your deposit.
Government schemes
Shared ownership and right to buy are two government schemes set up to help people to get on the property ladder so check out our detail pages on these schemes. Plus there are sometimes new schemes available in specific areas like the discounted home scheme or for particular professions like the forces help to buy scheme. If you think you may be eligible for these and want to discuss mortgage options connected with the schemes, we have a wealth of experience dealing with these types of mortgages so get in touch today.
Still worried about how you’ll be able to get a deposit?
We have briefly provided you with some examples as to how much you will need for a deposit, and some ways you can obtain this. Here’s our top types on setting aside some deposit money:
- Use a savings app or set a goal with good old pen and paper and keep topping up the chart when you save more. Having something you can look at every day will keep your goal in your mind, and might just encourage you to save on that coffee or takeaway, and pop that money into your savings instead, every little counts after all!
- Set a spending budget, if you can set a savings goal every month and stick to your spending budget each month, having a regular amount going into your savings account will really help you to progress towards your goal.
- Check online for the best savings accounts and maximise your interest, there are lots of good sites to help with this.
- Increase your income – you could look at taking on more hours or even taking a second job. Perhaps you have a hobby or skill that could earn you extra money online.
- Reduce your outgoings – Make sure you check through all your current direct debits to see if there is any way you could save money there and make sure you aren’t paying over the odds or unnecessarily for old or unused subscriptions etc.
Everyone has their own unique situation and advising isn’t just about obtaining the mortgage or deposit needed right now but also helping people to put in place a plan so they can achieve their long term goals.
In these unique circumstances, Evergreen Mortgages are here to help.
