How much money do you need to buy a house?
How long is a piece of string? Depending on the price of the house you want to buy, this changes the amount of money you need for your mortgage deposit. However, this can also be impacted by whether you're a first time buyer or are climbing the property ladder.
Well, how long is a piece of string?
House prices were at an all-time high in March 2021, with the average house price now sitting at around £268,000.
This figure changes, depending on a long list of preferences including house size, parking options, proximity to schools and of course, location. In London, the average house cost is £500,000, which is in stark contrast to the average of £146,000 in the North East of England.
The harsh truth about buying a house is that you need a lot more than just a mortgage deposit. There’s a general rule to follow here, and that’s to do your research before you set a budget. Don’t forget those pesky fees and extra charges either!
FIRST TIME BUYERS
If you’re a first time buyer, you’ll usually need to save between 5% and 20% of the property price for your deposit. For example, if the house you’re after is £150,000, you should probably save around £7,500, which works out at 5%.
If, however, you can save more than 5%, you could have better offers for your mortgage. Cha-ching!
If you are a first-time buyer and want to figure out how much you realistically have for your budget, I can help. I’ve created a piece on “What’s my budget as a first time buyer?” which outlines everything you should expect to pay.
PROPERTY MOVERS
For those climbing the property ladder (second time buyer or more) you should be prepared to have a slightly larger deposit. Lenders usually ask for a minimum of 10% as opposed to a minimum of 5% like our first time buyers.
Some lenders may offer you a 5%, although you may be at a disadvantage as you’re likely to have fewer mortgage offers. It’s a no-brainer really.
If you have an outstanding mortgage and need to work out your repayments, how much you could borrow and which rates you qualify for, there are a tonne of online mortgage calculators online that can help. All lenders, estate agents and well, anyone in property, tend to have these calculators available, so a quick Google search should bring one up.
If you’re moving house and want to figure out how much you realistically have for your budget, head over to “Can I afford to move house?” which outlines everything you should expect to pay.
A HUGE MILESTONE
Buying a house is a huge milestone, whether that’s your first, or your last. Unfortunately though, some people do struggle to get a mortgage.
If this is the case, you may be able to get a guarantor mortgage instead, which means someone else is responsible for paying the mortgage if for any reason you can’t. Keep in mind that this is legally binding – and not to be taken lightly!
HOW CAN I HELP YOU?
I’m Gareth, but you can call me Big G.
I have over 20 years of experience within the property industry and I’m also a mortgage adviser, meaning I’m the perfect person to help you along your property journey. I also really care about helping people get onto the property ladder. It’s not easy, but with the right professional support, it’s made a lot easier.
Got a question? Seen a property term you don’t understand? Give me a call on 01905 426000.