Can I ask a question about house deposits?

[ssd]

Can someone tell me, if I bought a flat at 90,000 how much deposit I'd need?
First time buyer.
I'm asking as I've seen so much conflicting advice, saying you need 5% deposit or 10% deposit. I know it depends which mortgage you get, but why the difference?
I'm not asking for me, but for a family member.
I know there is lots of advice out there, but it's confusing.
The family member has a help to buy isa with about 2000 in it.
Thanks

It's up to the mortgage lender so they need to ask them. Don't forget fees etc.

Generally more bigger deposit you can put in the better the rate u can get

It all depends on your mortgage offer

A lot of depends on how much you earn, as that will factor into how much a bank will lend. It’s not just the house price and deposit.

Natwest and a couple of other banks are offering first time buyers mortgages on 5% deposits at the moment. It depends what each bank wants to offer and to who, that’s what makes it different. Best bet is to use something like Natwest’s ‘how much could I borrow?’ mortgage calculator and she what they’ll lend your family member. It’s not exact but will give an idea.

5% of £90,000 is £4500

It depends on the mortgage lender. Also, a bigger deposit usually gets you better rates and also reduces your risk of negative equity.

You tend to get better mortgage rates with higher deposits. So 95% mortgage might be 3%, 90% could be 2.5%, 85% could be 2% (making these numbers up),

Obviously the bigger the deposit the less you have to pay back so mortgage will be lower too.

I'd aim for min 10%, then the help to buy bonus will be a nice bonus as it would get you to 12.5%. But get them to call some mortgage brokers e.g L & C who I found great, they'll talk them through the options

Thank you.
Here's another question, if they were buying a 90,000 place with 5% deposit, roughly how much would they have to earn to get a mortgage?

A lot of lenders will not lend more than 4.75* salary, and some even less. Although this depends on a lot of factors such as other risks that they see, I.e. visa-status, security of employment etc. So if someone earns £20k they could in theory get a mortgage of up to somewhere around £95k if they are otherwise “desirable” to lend to.

Tjanks

@ssd I would use some mortgage calculators and work out what the monthly repayments would be and whether they could afford that.

I would also (as a property lawyer) sound a huge note of caution about buying a flat as they can be fraught with problems (expensive service charges etc)

OK thanks

And as far as flats are concerned, how long is the lease? The longer the better. Anything under say, 80 years, I wouldn't be interested in.

Try the Natwest mortgage calculator (I think it’s the easiest to use) but also lots of things will factor in like other debt, any children, single or couple applicant, credit rating. Their best bet is to go and speak to the bank

@NeverTwerkNaked so what would you suggest for all the people who can’t afford a whole house?! Just don’t buy?

A note of caution doesn’t mean don’t do it, it just mean proceed with caution. And is very good advice.

Thanks again

Here's something that's just occurred to me, ds is a student, if they took the full student loan and kept it aside towards a deposit, is this a good idea? Ds lives at home and has no fees, in Scotland.

He could do that - but how would he live - would you support him or would he work? Student Loan is at a comparatively low rate but mortgage rates are very low at the moment anyway. Also, remember a fixed rate mortgage is fixed rate, Student loan is variable anyway and on top of that the government can and do change the terms whenever they feel like it - I personally wouldn't use a SL to buy a property. To invest so you can pay it back if the terms become too onerous, yes. Lots of people did that when I went to uni (I had friends with very rich parents who didn't need the loan, I don't think it was typical!).

Sanander also have an online calculator and you don't need to be a customer to use it.

I have no idea about Scotland, but they might qualify for first home buyer (so no stamp duty) if its their 1st home?

We have just been through the calculators and talking to the bank recently. There was FAR more weight placed on our monthly wage, rather than the deposit. For example, if we put down £30,000 deposit as opposed to £130,000, it made barely any difference to the loan amount. Whereas, if my wage was different (more or less) if made a massive difference to the loan amount. Maybe this is common knowledge, but I'd always wrongly assumed a large deposit would hold more weight!

We have gone to a mortgage broker and the deals seem much better than any of the bank offers we had.

Exactly @Ninkanink. It means make sure you know what you are getting into. And certainly if you could buy a small house for the price of the flat you are looking at then I would always recommend choosing the house.