Saving for a deposit is often the first major step for any prospective buyer. Generally, most lenders look for a deposit of around 5% of the property’s value. However, as property prices have risen in recent years, some buyers may need a higher deposit to meet mortgage affordability requirements; typically, lenders allow borrowing up to 4.5 times your annual income, although, in some circumstances, certain lenders can go higher

Mortgage Interest Rates

First-time buyers should also keep in mind that interest rates vary depending on deposit size. While some mortgages are available at 5% - deposit, you’ll pay a higher interest rate, but a 25% deposit will give you access to lower-interest deals. So, for each 5% you put down, a reduction in interest will apply, making repayments more affordable over time.

The Advantage of a Larger Deposit

Though saving for a deposit can be challenging, a larger initial amount can lead to better mortgage terms. With a larger deposit, lenders are more likely to offer lower interest rates and favourable deals, helping reduce monthly repayments and make the mortgage more manageable in the long term.

Gifting a Deposit
It is always worth asking parents or grandparents if they are in a position to gift you some or all of your deposit money to help you get onto the property ladder. This has become more common in recent years as it strengthens a first-time buyer’s financial profile, improving eligibility while also reducing financial pressure, enabling them to retain more of their own savings for other costs related to homeownership.

For personalised financial or mortgage advice, don’t hesitate to reach out to the team at 75 Point 3!