Managing to secure a mortgage isn’t just about proving you can afford to repay it each month. You’ll need to have at least 5% of the deposit saved up – more if you want the lowest rates. But with house prices steady, even 5% can be a huge amount.
If saving tens of thousands of pounds feels like a daunting prospect, you aren’t alone. We asked the Money Advice Service to share some of the ways you can boost the value of your deposit.
Apply for a Help to Buy equity loan
If you’re buying a new build home, you can apply for a Help to Buy loan of up to 20% (up to 40% in London) of the property value. The first five years are interest free, and after that you’ll be charged a fee of 1.75% of the loan’s value. The fee then increases every year, according to the Retail Prices Index plus 1%. Fees do not count towards paying back the loan.
You don’t even need to be a first time buyer to take advantage of this scheme, but you do need to have a 5% deposit saved up, and the house you’re buying must be your only home. Read more about paying back the loan via the UK Gov website.
Help to Buy – Mortgage guarantees: closed to new applicants as of 31 December 2016
The Help to Buy mortgage guarantee scheme was designed for those who only had a 5% deposit. It closed to new applicants on 31 December 2016 but if you’re already on the scheme you can read more about how it works here.
Save in a Help to Buy ISA
If you’re a first time buyer, you can save up to a maximum of £200 a month towards your first home with the ISA. Once you reach £12,000 (or before) you’ll be able to get a 25% return tax-free. So if you save the maximum amount, it’s a bonus of £3,000.
