How Much Deposit Do I Need to Buy a Home as a First Time Buyer in Sunderland?

First time buyer mortgage advice in Sunderland

Once you take the leap of faith and decide to start looking for your first home, it can be tricky knowing where to begin. Buying a house in any mortgage situation can be a stressful experience.

You could be starting your home buying journey for a second time as a home mover; a local landlord with hopes of growing your buy to let portfolio; a self employed applicant struggling to match with a deal that suits your working life and financial situation; or a completely different situation, nevertheless you’re all in the same boat.

Everyone’s home buying journey will be tricky, it’s never easy to buy a property! As a first time buyer in Sunderland, you will unaware of all of the things that come with buying a home. Even more specifically, you may not know how much deposit you need to put down.

How much deposit do I need to put down?

When buying a home, you will need to provide a deposit. The deposit amount that you put down will differ from applicant to applicant as financial situations, income and credit scores, etc., will change.

A deposit is one of the forms of evidence that a lender needs to know that you’ll be able to afford a mortgage on the property that you’re buying. Deposits are based on a percentage of the property’s price. Depending on different factors, the minimum percentage that you need can change.

Providing that you have a clean credit history, and your lenders find you to be a ‘reliable’ applicant, you may only have to provide a minimum of a 5% deposit. In turn, if your credit score is poor and you don’t seem like a ‘reliable’ applicant, they may require you to put down a deposit greater than 5%. We’ve seen them ask for 10%-15% before now.

Of course, the total deposit amount can vary from property to property; when the property price goes up, the deposit naturally will too. A 5% deposit on a £150,000 would be very different to a deposit for a home valued at £360,000.

Unfortunately, sometimes the deposit that’s required can change if the economy is performing badly. For example, during the coronavirus pandemic in March 2020, the property market crashed, leaving some lenders wanting a minimum of a 15% deposit!

Can I put down a bigger deposit?

If you put down a greater deposit than the minimum amount required, your chances of being accepted could slightly increase. Therefore, if you find your dream home and you have more than a 5% deposit, you could put down more if you want to.

As a mortgage broker in Sunderland, when we see applicants putting down a greater deposit, it’s usually because of a gifted deposit giving them a boost. A gifted deposit is simply a family member or friend gifting the applicant funds to help make up their mortgage deposit. If you are nearly at the 5% mark and then you receive a gifted deposit, you could have a deposit around the 7% mark, which can only benefit your application.

Are there ways to help me get my deposit?

If you’re struggling to make up your deposit as a first time buyer, there are different ways that can help you get there. The government have created new ways to help first time buyers (like you) get onto the property ladder.

‘Own Your Home’ consists of lots of different schemes that can help you start your homebuying journey. Most of these schemes were introduced off the back of the credit crunch in 2012. The schemes helped pump confidence back into the market, meaning that buyers could comfortably start their home buying process without feeling worried that something could happen.

Now there are even more schemes than there were in 2012. ‘Own Your Home’ includes more than 10 homebuying schemes to help all types of buyers to get onto the property ladder. However, there are a lot more schemes targeting first time buyers, like yourself.

Schemes that you should be aware of include:

  • Help to Buy Equity Loan
  • Shared Ownership
  • Mortgage Guarantee Scheme
  • Lifetime ISA
  • Right to Buy
  • First Home Scheme

Our mortgage advisors specialise in help to buy mortgage advice in Sunderland as well as other mortgage schemes. For more information on these schemes and help to see whether you qualify them, get in touch with our team.

Do I need a mortgage deposit?

There are only few situations where you will not need a deposit for a mortgage. One example would be if you have a family discount on a property or a gifted deposit that covers the entirety of the deposit. Another example would be if you were a council house tenant and you wanted to utilise the Right to Buy scheme to buy your home and the discount provided by the government covered the deposit.

Customers have also asked “can I take out a loan for the deposit?”. As a mortgage broker in Sunderland, we would not recommend doing this. Lenders will be able to see that you’ve done this and may penalise you for doing so. If you do this, you’re essentially borrowing 100% of your mortgage, which also means that you’ve got two large loans to compensate for.

In summary, in most situations, you will need a deposit. A deposit is not only a good piece of evidence that you can afford a mortgage but shows that you’re reliable and have saved up overtime to get to your target amount.

First time buyer mortgage deposit summary

As a first time buyer in Sunderland, it’s likely that you’re going to need a minimum 5% deposit. However, remember that this can change depending on different factors such as your credit score and evidential documents like bank statements.

If you are look for first time buyer mortgage advice in Sunderland, feel free to get in touch with us. We are an experienced mortgage broker in Sunderland that has been working within the mortgage industry for over 20 years now. We know that it can be tough starting off your home buying journey with little no experience, and that’s why we’re here to help. & Sunderlandmoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
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