How Much Do I Need To Save To Buy A House?

Becoming a first-time buyer can be a very exciting time in a person’s life, but there is plenty that needs to be considered before this dream becomes a reality. One of the first big considerations that you need to think about is the money involved in buying a home.

In this guide, Andrew Lee Property Lawyers are here to offer you advice on how much you need to save before you buy a house.

Understanding Mortgages & Deposits

A mortgage is a loan that is taken out to help buy property or land. The standard mortgage runs for 25 years, however, this term can also be shorter or longer. You’ll typically need a minimum of 5% of the purchase price as a deposit, and then you borrow the rest as a mortgage from a lender such as a building society or a bank.

This loan is secured against the value of your home until it's paid off, and if you can’t keep up your repayments, the lender can ultimately repossess your home and sell it so they can get their money back.

You will generally need to save about 5% deposit to get a mortgage, however, saving more will give you access to cheaper mortgages and lower interest rates.

Other Costs

While some think that saving for a mortgage and deposit is the only thing needed, there are a lot of other costs to consider when buying a home, so it is important to save up additional money to help cover this.

For example, on a property that costs around £300,000 the fees on your mortgage could possibly add up to another £3000. This encompasses various things such as the arrangement, account, valuation, transfer and conveyancing fees. A property costing around £700,000 could mean you pay fees of around £4500.

If your property is above a certain amount of money, you will also need to pay stamp duty. The amount you pay depends on when you bought the property, how much you paid for it and whether you’re eligible for relief or an exemption. The amount you pay is a certain percentage, beginning at nothing for £250,000 and 12% for portions about £1.5 million.

Help With First-Time Buyers From Andrew Lee

If you have managed to get your finances together to purchase a home, Andrew Lee Property Lawyers is here to help you make the next step a reality. We can help you navigate the tricky world of property law for first-time buyers, ensuring that every step of the way is clear to you so you’re not left with any surprises further down the line.

We can help you understand help-to-buy schemes, legal obligations of loans, finding the right conveyancing and understanding your new purchase contract. We provide quality property law services to clients in Kent and across the South East of England and Wales, so if you need help getting on the property ladder, get in touch today.