Avg. 5% House Deposit = £15,400 Including Additional Fees

Whilst it was recently revealed that you will be able to buy a house with a 5% deposit, making it easier for more people to get onto the housing ladder, there are still some important additional expenses to consider…

Budgeting fintech, thinkmoney, have used their expertise to create a step-by-step guide on how to save for a deposit as a first-time buyer, before revealing the average priced deposit required, including the additional expenses often forgotten about > https://www.thinkmoney.co.uk/budgeting/life-events/how-to-budget-for-a-house/

Aspiring Homeowner’s Need to Save £15,400 for a 5% Deposit

The average priced house in England is currently £267,000 (as released by ONS on 24th March)
A 5% deposit for this house would amount to £13,350
However, additional expenses (all of which can be found below) average £2,050
In total, this amounts to £15,400

Four Additional Expenses You Need to Consider When Buying Your First Home
Additional Expense	What is this?	Cost for the Average Price House (£267,000)
Stamp duty	This is a tax on any property purchase in the UK, however, you only need to pay for this if your property is over £300,000 or £500,000 if shared ownership.	£0 (as under £300,000).
Conveyancing	This is the process of legally transferring a property from one partner to another. There are two stages to conveyancing, with the first being the exchange (where the terms of the purchase are finalised) and the second being completion (where the property is transferred).	Between £800 and £1,500 so an average of £1,150.
Surveys	The survey will look at the structure of the property and highlight any issues (e.g. unstable walls). Surveys are optional and do not need to be completed for the purchase of a property to go through. However, in most cases, surveys are definitely worth the money as for a relatively small fee, they can highlight issues with a property that would otherwise cost you in the future.	The price of a survey varies depending on the type of survey you choose: - Condition report - £300 - Homebuyers report (survey only) - £350 - Homebuyers report (survey and valuation) - £450 - Building survey - £500 An average of £400 for one of the above.
Mortgage brokers	Mortgage brokers are companies who help you look for a mortgage when you start buying a home. In addition to giving you a hand when trying to find the right mortgage for you, brokers can be useful as they can advise you on which one might suit you best by looking past the upfront costs and considering the long-term financial impacts.	Broker fees are usually around £500, but some brokers work on a commission basis (i.e. the mortgage company will pay them this fee), in which case they are completely free to use.
TOTAL ADDITIONAL COST		£2,050

You can find more information about these additional expenses in thinkmoney’s guide.

Other Questions Aspiring Homeowner’s May Have

thinkmoney have also answered some of the most common questions for aspiring homeowners that are planning on getting a 5% mortgage.

What is the Mortgage Guarantee Scheme?

Since many people have been struggling financially this year, the government has introduced a mortgage guarantee scheme. The scheme essentially means that you only need a 5% deposit and lenders will offer a 95% mortgage. It has been a tough 12 months if you’ve been trying to get on the property ladder, especially as the national average asking price for all properties is 3.0% higher than in February 2020. So this new scheme, which launches in April, will hopefully lend a helping hand to homebuyers.

Who is eligible for a 95% mortgage?

Some people might think that the 95% mortgages are for first-time buyers only, but this isn’t the case. It is available for anyone who is looking to buy a home that is worth up to £600,000.

How does the Mortgage Guarantee Scheme work?

Many lenders might have been reluctant to accept a 5% house deposit during the current climate, but thanks to this scheme, it is now possible. The government has made a pledge to repay the lenders some of their losses if the buyer defaults on any of their mortgage repayments. Therefore, the risk for the lenders has significantly dropped so they can lend mortgages worth up to 95% of a home’s price.

How do you apply for a 95% mortgage?

Applying for a 95% mortgage will be the same process as applying for any other mortgage. The same checks will still apply to ensure that you can comfortably afford the repayments.