Something many homebuyers often ask is, should I save for a larger deposit or should I purchase now and wait for prices to rise? Unfortunately, there isn’t a simple answer to this question. There are a number of factors to consider and each person will be in their own unique position. However in general, the bigger the deposit, the better position you’re in.
There are many benefits to having a larger deposit. First of all, it puts you in a better position with the bank should you struggle making repayments. It may also grant you access to better deals and lower interest rates on you loan. This is because the banks will be taking less of a risk and may be willing to arrange a better deal for you. Having a larger deposit will also mean that you can avoid paying Lenders Mortgage Insurance. This is an insurance charge the banks will add to cover the risk that they’re taking with small deposits. If your deposit is less than 20% you will have to pay this charge.
Although there are many positives to saving for a larger deposit, a smaller deposit may work better for you. Larger deposits will take longer to save for and during the time you spend saving, you may miss opportunities in the market. Being on the market earlier allows you to purchase sooner and exploit the growth in property prices. Currently there is a lack of properties on the market but a high demand. This means that properties are selling fast and for high prices. However, we believe that the uncertainty in the market will pass in the near future, and when that happens, the market could become crowded with properties, resulting in harder sales and lower price growth. Although this is good news for first-time buyers saving for a larger deposit, it’s not so great for those who have a property to sell who’re also saving for a mortgage deposit. Again, there is no simple answer on whether you should keep saving for a larger deposit or buy now. Your individual circumstances may force you one way or the other. Therefore we advise you to speak to a local property expert in your area for a more personal opinion regarding your situation. If you would like some advice regarding mortgages and when to sell, get in touch with Norfolk Property Online! We can be reached on 01603 300900, by email: [email protected] or come in and see us at De Vere House, 90 St Faiths Road, Norwich, NR1 1NE.
We’ve also compiled the best mortgage rates for this week using a property value of £250,000 and varying deposits of 10%, 20%, and 50%.
Recent Comments