What is the usual Deposit when Buying A Home?

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  • dollymariedollymarie Posts: 3,562
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    I was able to buy my first home with help from the Lloyds "lend a hand" scheme, and the bank of Mum and Dad.

    I put down 5% of the property value, they put the other 15% in an account (for which they gain 3.9% interest over the next 3 years) as a security that if I default on the mortgage, the money comes out of that account.

    Then I got a 95% mortgage on the rest, so whilst I own the property outright, and am paying off all of it, due to the low amount of deposit I did put down, the money my parents locked away for 3 years acts as a guarantor due to the risks that Lloyds took.

    I was lucky that they were able to help me out (they had to put down just short of 15k) but am glad it meant I am able to get on the property ladder, they also get something out of it because they get the money plus interest back in 2 and a half years now.
  • LostFoolLostFool Posts: 90,623
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    MARTYM8 wrote: »
    If you take out a high mortgage with a low deposit for the first few years almost all of your monthly payments go on interest to the bank.

    Yes, I remember the feeling when I got my first mortgage statement at the end of my first year. 12 payments and I still owed 99% of what I had originally - due to the fact that in the early days you are almost entirely paying off interest. It was quite soul destroying.
  • [Deleted User][Deleted User] Posts: 1,229
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    davidmcn wrote: »
    Ah, not like the "good" old days when the banks would offer 100% mortgages and your stamp duty and legal expenses on top of that, making it more like 110%.

    We were lucky with our first home, 100% mortgage, only had to pay £4k deposit. Got stuck with a 6.5% fixed rate for 5 years though, which is finally up in October. :D
  • LostFoolLostFool Posts: 90,623
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    sahalouise wrote: »
    We were lucky with our first home, 100% mortgage, only had to pay £4k deposit. Got stuck with a 6.5% fixed rate for 5 years though, which is finally up in October. :D

    The problem you will face is that your LTV will be still over 90% (possibly over 95%) so its unlikely that you could move your mortgage to get a better rate. One way around this would be to use some savings as a lump sum payment to bring your outstanding amount down.
  • [Deleted User][Deleted User] Posts: 1,229
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    LostFool wrote: »
    The problem you will face is that your LTV will be still over 90% (possibly over 95%) so its unlikely that you could move your mortgage to get a better rate. One way around this would be to use some savings as a lump sum payment to bring your outstanding amount down.

    No idea what you just said but it didn't sound good :( I leave it up to the fiance and his mother.
  • [Deleted User][Deleted User] Posts: 11,110
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    HollyG wrote: »
    Quoted same post twice in disbelief.

    Disbelief about what exactly? :confused:
  • monkeydave68monkeydave68 Posts: 2,421
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    a min deposit for a 250k house ... what could go wrong lol
  • [Deleted User][Deleted User] Posts: 11,110
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    a min deposit for a 250k house ... what could go wrong lol

    This site has so many nasty people on it and so many smartarses.

    250,000 was just an example.

    it could equally be 200,000 or 180,000. Whatever.

    It was just a question. :rolleyes:
  • Red ArrowRed Arrow Posts: 10,889
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    Sorry to hijack this thread, but thought this is the best place to ask.

    Were looking at buying this year, looking at houses around the 100k mark with 10% deposit. But were not sure how much extra we need to save to pay any fees.

    What extra fees are involved and what is the average amount to pay for them? Were in Scotland btw.
  • davidmcndavidmcn Posts: 12,086
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    Red Arrow wrote: »
    Sorry to hijack this thread, but thought this is the best place to ask.

    Were looking at buying this year, looking at houses around the 100k mark with 10% deposit. But were not sure how much extra we need to save to pay any fees.

    What extra fees are involved and what is the average amount to pay for them? Were in Scotland btw.

    At that price level (i.e. up to £125K) you don't need to pay stamp duty, so your only "legal" costs are Land Register fees (up to £100k will be £180 including registration of your mortgage, or £300 if you go over £100k), and your solicitor's fee (which will vary depending on who you use, but say £500).

    Depending on what mortgage you go for you may well have other fees to pay to your lender.
  • [Deleted User][Deleted User] Posts: 11,110
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    bart4858 wrote: »
    It's customary to get a roof over your head in return for each month's rent. Perhaps you think that's not worth the rent money...

    But looking on the bright side, if you owned a £250K property today, and the value dropped 10% over the next year, the loss of £500pw wouldn't come out of your pocket.


    Nothing to show for my spend of 600 quid per month though is there.
  • [Deleted User][Deleted User] Posts: 13
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    The standard deposit in the contract used to buy property is 10% of the property value. This sum will fall to be paid when you exchange contracts. Now, this amount is negotiable (i.e. you could just pay 5%) but a lot will depend on the upper chain i.e. are the sellers looking to use your cash deposit to fund their own deposit.

    This is completely different from the mortgage. If you can only get a mortgage for 80% of the property value, you will need to fund the remaining 20% yourself but only pay 10% over on exchange.

    Robin
  • [Deleted User][Deleted User] Posts: 11,110
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    c4rv wrote: »
    Two questions, have you actually saved anything for a deposit.

    What do you think you can afford per month.


    Yes......

    Am now thinking of blowing it on cars, holidays and gigolos though. Sod it! :p
  • LostFoolLostFool Posts: 90,623
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    Red Arrow wrote: »
    Sorry to hijack this thread, but thought this is the best place to ask.

    Were looking at buying this year, looking at houses around the 100k mark with 10% deposit. But were not sure how much extra we need to save to pay any fees.

    What extra fees are involved and what is the average amount to pay for them? Were in Scotland btw.

    I can't comment on Scotland's legal system but in England I would budget
    Mortgage fees : anything from £0 to £1000. Sometimes it's better to pay a higher fee to get a lower rate - but you need to do the maths.
    Solicitor fees - Another £1000
    Survey: £200-500 depending on size and state of the property

    On top of that you have moving costs plus any new furniture, white goods and redecorations or repairs that you need immediately.

    Personally, I would budget about £4-5,000 on top of the purchase price. When moving house you bleed money for a few months but at the end of the process it is worth it - even if you do have to leave on beans on toast for a while.
  • LostFoolLostFool Posts: 90,623
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    HALibutt wrote: »
    Nothing to show for my spend of 600 quid per month though is there.

    You are getting somewhere nice to live that's hopefully warm and dry. All for about £20 a day! That seems quite a sensible thing to spend your money on. OK. doesn't have some of the advantages of buying but renting has its own conveniences and benefits.
  • davidmcndavidmcn Posts: 12,086
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    LostFool wrote: »
    Survey: £200-500 depending on size and state of the property

    In Scotland all properties are sold with a home report, which includes a survey normally acceptable to purchasers' lenders. It is possible that your lender will want you to get another one though, particularly if it's more than a few months old.
  • Red ArrowRed Arrow Posts: 10,889
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    davidmcn wrote: »
    At that price level (i.e. up to £125K) you don't need to pay stamp duty, so your only "legal" costs are Land Register fees (up to £100k will be £180 including registration of your mortgage, or £300 if you go over £100k), and your solicitor's fee (which will vary depending on who you use, but say £500).

    Depending on what mortgage you go for you may well have other fees to pay to your lender.
    LostFool wrote: »
    I can't comment on Scotland's legal system but in England I would budget
    Mortgage fees : anything from £0 to £1000. Sometimes it's better to pay a higher fee to get a lower rate - but you need to do the maths.
    Solicitor fees - Another £1000
    Survey: £200-500 depending on size and state of the property

    On top of that you have moving costs plus any new furniture, white goods and redecorations or repairs that you need immediately.

    Personally, I would budget about £4-5,000 on top of the purchase price. When moving house you bleed money for a few months but at the end of the process it is worth it - even if you do have to leave on beans on toast for a while.
    davidmcn wrote: »
    In Scotland all properties are sold with a home report, which includes a survey normally acceptable to purchasers' lenders. It is possible that your lender will want you to get another one though, particularly if it's more than a few months old.

    Thanks all, it's not as bad as I thought.

    We know a few people who can do the survey for us for free which is handy and the mortgage were looking has low fees.
  • LostFoolLostFool Posts: 90,623
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    The standard deposit in the contract used to buy property is 10% of the property value. This sum will fall to be paid when you exchange contracts. Now, this amount is negotiable (i.e. you could just pay 5%) but a lot will depend on the upper chain i.e. are the sellers looking to use your cash deposit to fund their own deposit.

    This is completely different from the mortgage. If you can only get a mortgage for 80% of the property value, you will need to fund the remaining 20% yourself but only pay 10% over on exchange.

    Good point - the two are different. That totally confused me when I first bought. However, this thread seems to be primarily about the mortgage deposit.
  • bart4858bart4858 Posts: 11,414
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    HALibutt wrote: »
    Nothing to show for my spend of 600 quid per month though is there.

    Spend a month living out of doors 24/7, then come back and still tell us that that £600 would have wasted!

    Anyway, you can say the same thing about paying for electricity and gas, telephone calls, internet, TV licence, even food and drink (after you've consumed it); nothing to show for all that money. But it's all part of the cost of living.

    Long-term maybe people are better off buying, but there's nothing wrong with renting for a few years, especially when house prices aren't increasing.

    (When I eventually bought my first property, it was a tiny studio flat. But I'd been renting grotty rooms and bedsits for years, so it seemed like luxury. Perhaps if you're already renting a substantial place, then I can appreciate that moving into a typical FTB property might seem like a step backwards.)
  • c4rvc4rv Posts: 29,538
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    HALibutt wrote: »
    This site has so many nasty people on it and so many smartarses.

    250,000 was just an example.

    it could equally be 200,000 or 180,000. Whatever.

    It was just a question. :rolleyes:

    ignore him, judging buy his other replies on other threads he is either clueless or trolling
  • What name??What name?? Posts: 26,623
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    bart4858 wrote: »
    Long-term maybe people are better off buying, but there's nothing wrong with renting for a few years, especially when house prices aren't increasing.

    When house prices aren't increasing is probably a good time to look into buying as you are more likely to find a bargain and committed sellers.
  • Tt88Tt88 Posts: 6,827
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    bart4858 wrote: »

    Long-term maybe people are better off buying, but there's nothing wrong with renting for a few years
    (.)

    Definitely agree. I think the problem with renting is youre not always guarenteed you get to stay there.

    For example a couple i know live in an expensive area. A few years back they were both earning a lot but could have only afforded a small 1 or 2 bed flat. The woman is all about status so prefers to rent a larger, prettier house in the area for only a little less than a mortgage on a cheap place! Plus they have to rent out the spare room to strangers to afford the rent.

    Everything was going fine until the owner of the house mentioned that she was thinking of moving back so it was possible their contract wouldnt be renewed. Luckily she didnt move back but surely that does make you panic when you have a job nearby and could potentially be homeless.
  • LostFoolLostFool Posts: 90,623
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    Tt88 wrote: »
    Definitely agree. I think the problem with renting is youre not always guarenteed you get to stay there.

    That's true but it also works the other way - you can move very easily without the cost and hassle of selling and buying so you have a lot more flexibility.
  • tony13579tony13579 Posts: 1,145
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    HollyG wrote: »
    Yes.

    Go to a mortgage web site or a bank. Find the best rates and minimum deposit.

    It's all online.
    What you are looking for is "LTV"
    Loan to value.80% LTV means you need 20% deposit.
    I thought most wanted 20% deposit at the moment. + £2000 survey/arrangement fee
  • What name??What name?? Posts: 26,623
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    LostFool wrote: »
    That's true but it also works the other way - you can move very easily without the cost and hassle of selling and buying so you have a lot more flexibility.

    Not if you buy a place with good rental potential. Then you have more flexibility as you can rent, or sell and move and return at any time.
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