New research has revealed that the average couple can buy their first house three years sooner by putting down a 5% deposit.
One of the decisions facing people that want to purchase their first house is the amount of money they need to save for a deposit on a house. Making a deposit of 15% or more means that they need to borrow the less and will also pay less interest.
The government’s Help to Buy policy has enabled first-time buyers to obtain a mortgage with a 5% deposit.
A recent survey by Hamptons estate agents found that it takes the average couple two years to save for a 5% deposit and about five years to save for a 15% deposit. These figures are based on average property prices outside of London.
A 5% deposit on an average £162,000 house will cost £190 more in monthly payments than if a 15% deposit is made. Over the lifetime of an average mortgage, this adds up to borrowers paying an extra £57,000.
The decision facing first-time homebuyers is whether to wait an extra three years before buying a house in order to save on monthly mortgage payments, or buy sooner but pay the price in extra monthly payments. It’s a decision which largely comes down to the amount of funds they have available when paying their deposit.
Whichever route first-time buyers take, they will also need to consider a mortgage insurance policy to protect their mortgage payments.