Best of the Week
Most Popular
1.Bitcoin War Begins – Bitcoin Cash Rises 50% While Bitcoin Drops $1,000 In 24 Hours - Jeff_Berwick
2.Fragile Stock Market Bull in a China Shop -James_Quinn
3.Sheffield Leafy Suburbs Tree Felling's Triggering House Prices CRASH! - Nadeem_Walayat
4.Bank of England Hikes UK Interest Rates 100%, Reversing BREXIT PANIC Cut! - Nadeem_Walayat
5.Government Finances and Gold - Cautionary Tale told in Four Charts - Michael_J_Kosares
6.Gold Stocks Winter Rally - Zeal_LLC
7.The Stock Market- From Here to Infinity? - Plunger
8.Ethereum (ETH/USD) – bullish breakout of large symmetrical triangle looks to be getting closer - MarketsToday
9.Electronic Gold: The Deep State’s Corrupt Threat to Human Prosperity and Freedom - Stewart_Dougherty
10.Finally, The Fall Of The House Of Saud - Jim_Willie_CB
Last 7 days
2 Charts That Might Define the Fed’s Jerome Powell Era - 13th Dec 17
UK Stagflation Risk As Inflation Hits 3.1% and House Prices Fall - 13th Dec 17
Stock Market Elliott Wave Forecasts - Is the World coming to the end? - 13th Dec 17
A Method Traders Can Use to Confirm an Elliott Wave Count - 13th Dec 17
Best Time / Month of Year to BUY a USED Car is DECEMBER, UK Analysis - 13th Dec 17
A Former Wall Street Veteran: Good Traders Are Born, Not Trained - 12th Dec 17
Buy Gold, Silver Time After Speculators Reduce Longs and Banks Reduce Shorts to Continue? - 12th Dec 17
Masters of Economic and Political Illusion – in Taxes, Debt, Government, and Markets - 12th Dec 17
Approved Used Land Rover Main Dealer Real Customer Buying Guide - Hunters, Chester - 12th Dec 17
Gold Price 100% Bullish Signal - 12th Dec 17
Epic Stock Market & Fixed Income Bubble Will Not End Well - 12th Dec 17
Bitcoin can be stolen. Although Can’t be hacked - 11th Dec 17
Have Stocks Reached A Permanently Rigged Plateau? - 11th Dec 17
Trying To Beat The System Is A Fatally Flawed Investment Strategy - 11th Dec 17
Is This The Beginning Of The Next Silver Rush? - 11th Dec 17
The Dow Gold Ratio - 11th Dec 17
Evidence of a Stock Market Top Mounting - 10th Dec 17
Bitcoin Doesn’t Exist – Forks and Mad Max - 10th Dec 17
Bitcoin Doesn’t Exist – Putting the Banks Out of Business - 9th Dec 17
China’s Struggle for Market Economy Status - 9th Dec 17
Is Gold Really Strong? - 9th Dec 17
Bitcoin Parabolic Mania - 8th Dec 17
SPX Make a 61.8% Retracement - 8th Dec 17
Gold, Stocks and Bonds - The 3 Amigos Update - 8th Dec 17
Gold Stocks Break, Gold to Follow - 8th Dec 17
4 Charts That Show How Trump Tax Cuts Will Trigger A Recession - 8th Dec 17
Precious Metals Breaking Down! 3 Amigos to Abort? 4 Horsemen to Ride? - 7th Dec 17
Bitcoin Just Smashed Through $12k… Wait, $13k… Now $14k… This Is Getting Ridiculous! - 7th Dec 17
Stock Market Tops Look Like This - 7th Dec 17
Crude Oil, Oil Stocks and Invalidation of Breakouts - 7th Dec 17
Bitcoin Doesn’t Exist – 2 - 7th Dec 17

Market Oracle FREE Newsletter

Traders Workshop

How Much Money Do First-Time Home Buyers Need for a Deposit in the UK?

Housing-Market / UK Housing Aug 03, 2017 - 02:08 PM GMT

By: Boris_Dzhingarov

Housing-Market

The dream of buying a home one day is something that many people share. For some, realising this dream can be a long journey filled with questions, apprehension, and confusion. Of course, one of the biggest questions people have is how much of a deposit they need to save in order to buy a house in the UK? This one simple question helps to determine if it’s possible to even purchase a home, and when it may actually happen.



So how much money is needed? Let’s discuss.

What is a Deposit?

If it's your first time purchasing a home, then it's important you get a clear understanding of all the terms and steps involved in the process. The deposit is something that will be discussed and refers to the cash that you will be putting up-front. This money goes to the seller of the home. Typically, the deposit is referred to as a percentage of the purchase price. For example, you may put down 5%, which means you are putting downing 5% of the purchase price of the home.

The deposit can come from a variety of sources, which include money from the sale of a previous home, your own personal savings, or a grant/gift from someone.

The Bare Minimum

Here in the UK, there is a minimum amount of money that is required for the deposit. It is necessary that you come up with 5% of the property's value to be approved for a mortgage. The remaining 95% would be funded by the financial institution you are using. Of course, this shouldn’t stop a person from saving more than 5%.

When you put down a larger deposit, you will, in fact, need a small mortgage. What this means is that you’ll be paying back less money and your mortgage payments will be smaller. This can make your month-to-month expenses much easier to handle. Stats calculated in 2015 showed that the average first-time buyer provided a 17% deposit on their first home, which is obviously much greater than the required minimum 5%.

Providing a larger deposit also means you are eligible for better mortgage deals and interest rates.

Getting Professional Advice and Help

Even if you've been successful in saving your deposit, understanding mortgage rates, terms, amortization schedules, and more, can be very daunting. This is exactly why it's a good idea for first-time home buyers to work with a mortgage broker. In fact, you can even find digital versions of mortgage brokers that provide services for free. A mortgage broker works by comparing the terms and rates by various lending institutes so you can find the best one for your needs and budget.

Making the Dream a Reality

So much of the house-buying process involves being prepared and knowing what comes next, including being aware of the kind of deposit that will be required on your part. Check out the government’s Help to Buy ISA if you need a savings plan to start building a deposit.

By Boris Dzhingarov

© 2017 Copyright Boris Dzhingarov - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife