Saving up a deposit to buy a house is becoming a much harder task for many young people. But just how much money do you really need to save up? Is it possible to buy a house for £10k? Or is that not enough in today’s crazy property climate? This post takes a look at whether a £10k deposit is enough.
Most lenders will settle for no less than a 5% deposit
This means that if you’ve got a £10k deposit saved up, you’re not realistically going to be able to get a mortgage on any property less than £200,000.
There are some 4% and even 3% deals out there, but they’re very hard to find. If you do manage to find one of these deals, it’s possible that you may be able to afford more.
Location matters when it comes to affordability
£200,000 won’t get you a house in many parts of the UK. In fact, it won’t get you a one bedroom apartment in many parts of the country. But there are some places in the UK where you can buy a house for less than £200k.
For example, the average house price in Scotland is currently £185k, while the average house price in North East England is £163k. If you live here or are prepared to move here, owning a house could be within your grasp.
Don’t mind living in a flat? A £10k deposit could offer much more flexibility as to where you can live. Unfortunately, you may still struggle to find a property in London, but there could be options in many other parts of the country providing that you don’t need a lot of space, and remember you will still need to bring professionals like Emerald Ritter Surveyors on board and pay for legal fees to ensure everything goes smoothly, so you may need more than £10k to get the ball rolling.
Paying less upfront means more each month
It’s important to remember that a lower deposit means more to pay off in the long run – which could mean higher upfront costs. If you’re still young, you may be able to take out a longer term mortgage of 30 years, which could spread out the costs enough to make each mortgage repayment relatively cheap. However, if you’re slightly older, you may not be able to access these types of mortgage and will pay more each month.
A mortgage calculator is the best way to work out exactly how much you are likely to be paying each month. You can find these tools online.
A decent salary and credit score will help
Mortgages aren’t just approved based on whether an applicant can afford the deposit. Unfortunately, there are other requirements that you need to meet too – such as a minimum income threshold and minimum credit rating.
Very low deposit mortgages are more likely to take into account these factors. The higher the deposit you are able to offer, the less important elements like income and credit score.
So, can you buy a house with a £10k deposit?
Yes, you can – but there are many caveats and limitations. Saving up more than £10k is a big ask, but could increase your chance of being able to afford a house. Save up £15k, and you could afford a property worth £300k, which will give you much more options.
This is a collaborative post
