Raising the deposit - first time buyer help

You are here:

Raising the deposit - first time buyer help

How can first time buyers save for a deposit?

The first step to buying a property is to plan how you are going to raise the deposit. The simple rule is the more deposit you can put down on your property, the better mortgage deal you can obtain. Basically if you can get save up for 5% or 10% of the property value then more mortgage lenders will be prepared to lend you their money.The APR for the mortgage will be lower and you will not have to pay a high loan to value fee or mortgage indemnity as it is called by some lenders. This fee is typically charged to people who have very small deposits as is effectively a charge to

In this guide

How can I get £18,000 for a deposit on my first property?

The average UK house price is now around £180,000. How do you raise £18,000 (10%) or £9,000 (5%) towards a deposit?

You will also need around another £5,000 for stamp duty, solicitor fees, a survey and removal costs. Then you need to add on the cost of furnishing your new property as well. So in order to buy your first home you really need around £5,000 plus 5 to 10% of the property value. You can get 100% mortgages but remember the mortgage rate will be higher as you are considered a greater lending risk and it will cost you more in terms of interest.

Whatever mortgage you decide on, you need to save a lot of money,and you should start now!

Find out about your credit report, see what the mortgage lenders see

Start with cutting down your expenditure. Try the following moneysaving tips:-

Cut down going out to one night a week
Take only packed lunches to work
Don’t buy coffee or tea from coffee shops have it at work
Don’t go on holiday this year
Cycle to work
Cut out your gym membership, go running instead.
Buy clothes and get them cheaper from ebay.
Sort out your credit cards, loans and overdrafts and consolidate your debts – pay off the ones with higher interest first. Switch your balance between credit cards. Get smart with your money and you could save hundreds of pounds a year.
If you smoke stop. That’s £140 a month for a 20 a day smoker!
Why don’t you take a part time job, do odd jobs one day or evening a week, maybe baby sit. If you can earn £30 a week extra that is £1500 a year. Everything helps

Other tips for raising the first time buyer deposit include:-

Ask your parents. They don’t need to be mega rich either. Your parents could potentially release some equity in their home and loan this to you. You could then pay them lower interest than you would pay the bank, or you could agree for them to have a stake in owning the property.
Asking your parents to remortgage their property, may sound businesslike but it is always better to borrow from your family than the bank!
You could take out a bank loan but is all you are doing is really increasing the value of your debt with the bank and paying a higher rate of interest. However this could be an option if you can afford the repayments. £18,000 over 7 years could costs about £280 to £300.
If you cannot buy a property alone, perhaps look at buying with a friend or look at shared or joint ownership.

Basically if you do manage the saving plan above you could find yourself considerably richer in 6 months time and well on the way to buying your first property.

Read the rest of our first time buyer guide for more information on buying your property for the first time.