Hoping to get onto the property ladder this year? Find out what options may be available to you and why it’s important to seek expert advice.
If you’re looking to buy your first property, you may be wondering how much deposit you need, especially with house prices still going up.
This month, the average asking price for a property has reached £367,501 – up from £360,101 in April according to Rightmove. Of course, the more you can save for a deposit the better, but what percentage of the purchase price do you need to find before you’re in a position to buy?
Some lenders are currently offering 95 per cent mortgages. Some are even offering 95 per cent mortgages over a 40-year repayment term, making the monthly repayments more achievable for first-time buyers. In essence, the longer the term of your mortgage, the lower the monthly repayments are likely to be and vice versa.
While this may sound appealing, it’s also important to be aware that borrowing over a longer-term will incur greater total interest payments. As a result, we’d recommend borrowing over the shortest possible term you can realistically afford.
If you’re not sure whether now is the right time for you to buy, there’s a couple of key things to consider. Firstly, if you get onto the property ladder now and prices continue to rise, it might be a weight off your mind to have your own place.
However, if you can save up for a bigger deposit, you may have a wider choice of mortgage offers to choose from when you buy. This could result in you achieving a more competitive interest rate. At the same time, you may worry that leaving it too long could mean you can’t afford a place if prices continue to rise.
Property market predictions
It’s impossible to predict with any real certainty what will happen with the property market. However, it is expected to ease up later this year due to inflation and rising costs.
Incidentally, if you’re self-employed and don’t have a large deposit, you may be heartened to hear that Santander recently announced it will allow self-employed homebuyers to borrow up to 90 per cent loan-to-value on a property. Affordability is based on two years’ worth of income.
The announcement comes following a OnePoll survey conducted last December revealing that more than half of self-employed workers believed they would be unable to get a mortgage.
For self-employed mortgage applications, lenders will normally use figures you’ve submitted in your tax returns or company accounts to assess how much you can borrow.
If you’re a first-time buyer or self-employed worker hoping to get a mortgage, we strongly advise you to speak to an experienced mortgage broker for expert advice. Even if you think your deposit may not be sufficient, it’s always worth a conversation to find out exactly where you stand.
We’re here to help with advice on your mortgage. Feel free to contact us.