We ended up opting for a 5% deposit to secure our mortgage. It was essential for us to get on the property ladder. We saved £12,000 in order to buy a £240,000 two-bedroom 1950's terraced house in Essex. Keep in mind not all banks or building societies offer this so it really does depend on if you'll be eligible. This was the perfect scenario for us at the time and I don't regret it one bit. As with all things there are pros and cons with it. Here are just a few pearls of my wisdom of what I found out. I really hope this new house buying series is helpful!
Pros
You can get on the property ladder a lot quicker as you don't have to save as much. At the time we bought, the house prices were going up so quickly that we could barely keep up. If we had stuck it out to save a 10% deposit there was a chance we would have been priced out. We just knew we had to take the plunge while we could.
By saving less for a house deposit, you have more of a chance to save extra to spend on doing the house up. Our house look quite a while to go through so we had four months between having our offer accepted and getting the keys. In those four months we were able to save some money to help with the renovations.
There are quite a few Government Help to Buy Schemes to choose from so there is great variety to find one that works for you. Some are only suitable for new homes. Sometimes we all need a little helping hand!
Cons
Your mortgage repayments will be higher each month as you are borrowing more so you need to really think about how this will effect you. Buying a house is a massive financial strain and it can be very hard to adjust. I still think you need enough money to be able to venture out for a social life a few times each month.
The main Government's Help To Buy scheme only applies to new builds. Which is great if you're after a new build! But we wanted to avoid a brand new house. My dad and boyfriend both work in the construction trade and were adamant an older house is always best.
You can only use certain lenders as not all banks and building societies offer the opportunities. This can quite limited who you use.
Hey, we bought our first home in April using a 5% mortgage. We bought a new build with Help to Buy as we ended up having to leave our rented house earlier than we had hoped due to our landlord selling so it was a case of getting on the ladder quickly! Buying in Liverpool meant it was a lot cheaper than other parts of the country and like yourself, we don't regret it at all!
ReplyDeleteI'm loving reading about your house though!
Ruth // www.ruth-writes.co.uk
I had a 5% deposit and I'm so glad we did now. Lots of people from Bristol are moving to Newport for cheaper houses and prices have gone through the roof. Waiting an extra two years to save more money would have been a waste of time because prices have gone up by 30k on my street! The interest did seem high at first but after 2 years my payments dropped by £120 a month
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