How Much Deposit You Need To Buy A Property

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Welcome to the mortgage mom. This is part of our video series for first-time buyers, to explain everything you need to know to be able to buy a property and demystify the mortgage market. So, deposits, how much do you need to be able to buy a property? Well, this time last year, the answer would have been very, very different because this time last year, 95% of loan-to-value mortgages weren’t on the market. Therefore, you would not be able to buy a property with a 5% deposit unless you took advantage of one of the schemes. When I am happy to say that this year, that is not the case. Therefore, you can buy a property with as little as a 5% deposit and it does not have to be part of the Home Equity Scheme or the Buying Assistance Scheme. You can buy using a standard traditional residential mortgage with a 5% deposit. Needless to say, it is important to tell you that the more deposit you make, the better your rate. Therefore, the highest rates in the market will be 95% of the value of the loan. And for those of you who don’t know what I mean, when I say 95%, loan to value, loan to value I mean the loan, the mortgage, the value of the property and the difference between those two. So if you are making a 5% deposit, 100 minus five is 95.95% of loan to value is what we call it in the broker world. So in case that confuses you, that’s what it is and the better the value of your loan, the better your rate. Now they usually go at 5% intervals before the rate changes. So, for example, deposit a deposit of 8%. You won’t get a better rate until you hit the 10% mark. Similarly, if you make a deposit of 12%, the rate will only decrease again, once it reaches that 15%, which is its equivalent to 85% of the loan at value. So if you’re ever looking at lender websites or googling, that’s what that means for those of you who don’t know. So ideally 10% is better because you will get better rates and there are more lenders with a 10% deposit, but you can technically buy a property with a 5% deposit. Now if you are really struggling to get a deposit, but you know, you can afford a mortgage. And there are so many of you who are renting a view. For example, know that they will probably pay more rent than their mortgage is going to be, but they are trapped in a situation where you can pay the mortgage, but cannot save for your deposit, and you do not have the option to move in with your parents. or not having to pay rent for a while. And there are so many of you in that position, there are schemes out there. 100% loan-to-value mortgages are a thing of the past, sadly that’s how I entered the real estate market. So I really simplify with those of you who are in the position of not being able to save. What I would say is that even saving a pound is something, and it affects the way you think. So save up, even just a little bit. And even if you think it literally doesn’t make sense because I’m never going to hit that milestone, I might as well buy something else with my credit card. It’s the mindset change that comes with saving a little money each month. So you think about it, but are you asking if there is something that will allow you to buy a property? If you have people around you who can potentially support you. And I’m talking about the family schemes out there, let’s just say the one I always refer to is the Barclays scheme and what allows family members to make them maybe not want to give you a deposit because they deposit a large amount of money. money but I want to be able to help. Then they can take advantage of the family trampoline. And that means they will put their savings into a savings account with Barclays, which is linked to your mortgage and they have to put 10% of the equivalent of what would be a 10% deposit in that savings account. They can’t touch it for five years, but they will get their money back with interest. As long as you keep your monthly payments. And there are some terms and conditions around that, but that’s all in a nutshell. That means you can buy a property, a family member, or someone who is happy to back that mortgage and puts you in a useful starting account. They get their money back in five years of interest. And five years from now, you still own the property and the property is yours. So that’s a great way to create no deposit required. And there are some similar schemes from other lenders too, but that’s the one I always refer to. So if you are saving for a deposit, my message is keep saving. I know it is very difficult. I always want to give them a round of applause when they first buy, that they come to us with a deposit saved, because it is an amazing, amazing achievement. And the market is trying its best to get you up the property ladder with a 5% deposit. So keep saving, keep going. Thank you very much for listening.

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