How Much Deposit Do I Need to Buy My First Home?
Buying your first home is an exciting step, but one of the biggest questions for many first time buyers is how much of a deposit do I actually need?
How much deposit does a first time buyer need?
In the UK, most first time buyers will usually need a deposit of at least 5% to 10% of the property price. If you were buying a home for £250,000, a 5% deposit would be £12,500, while a 10% deposit would be £25,000.
The size of your deposit can affect the mortgage options available to you. Mortgages are often described using loan-to-value, or LTV. This is the percentage of the property’s value that you are borrowing. For example, if you put down a 10% deposit, you would need a 90% LTV mortgage.
Is a bigger mortgage deposit better?
Generally, the larger your deposit, the lower your LTV. This can give you access to a wider choice of mortgage products and may help you secure a more competitive interest rate. However, that does not necessarily mean you should wait until you have saved a much larger deposit before speaking to a mortgage adviser.
There are mortgage products designed for buyers with smaller deposits, and the right option will depend on your income, credit history, monthly commitments and the property you want to buy. A mortgage broker can look at your circumstances and help you understand which lenders and products may be suitable.
It is also important to remember that your deposit is not the only cost involved in buying your first home. You may also need to budget for legal fees, surveys, moving costs and other expenses, so it can be sensible to keep some savings aside.
Work out what you could afford
If you are starting to plan your budget, try the Zest Money Group mortgage calculator. It can help you estimate potential monthly repayments based on the amount borrowed, interest rate and mortgage term, giving you a clearer starting point when planning your purchase.
When you are ready to take the next step, Zest Money Group can help you explore your first time buyer mortgage options. As an independent mortgage broker, we can look across a range of lenders and help you understand how much deposit you may need based on your circumstances.
Whether you already have your deposit saved or are still working towards it, getting mortgage advice early can help you plan your first home purchase with more confidence.
