First time buyers in Leeds may find the home buying process a little bit daunting. It is no surprise, you need to make sure your credit score is good enough, and that you have a reasonably large deposit saved, amongst other things. The latter is what we will talk about in this article.

Work Out How Much You Need to Save

To work out how much you need to save for a mortgage, you are going to need to work out your monthly disposable income. Once you have deducted your expenses and monthly expenses from your monthly income, you will be able to calculate and estimate how much you can allocate to your mortgage savings. This allows you to set clear and realistic goals for how much you need to save each month.

As a rule, when taking out a mortgage with a high street lender, you must provide at least 5 percent of the property cost. We tend to find most first time buyers in Leeds aim to save a minimum of 20% of the property price. The larger deposit you put down, the lower your monthly payments will be. If your credit is bad, your lender may want you to provide a larger deposit. This might be somewhere around 15% – 30% depending on your circumstances.

One of the reasons it may be better to save for a larger deposit is that you will have more access to competitive mortgage deals, some with lower interest rates. To work out the maximum amount of how much you can borrow for a mortgage, speak to a mortgage advisor in Leeds.

It is also worth saving some additional money to put towards the additional costs of buying a property. As well as your mortgage and protection advisor in Leeds will offer you insurance or cover for you and your property.

Are there any schemes available?

With a range of different government schemes available it is worth seeing if you are entitled to any of these schemes.

There is the Shared Ownership Scheme which provides the opportunity for those who can’t afford a mortgage or 100% of the home. Unlike the Equity Loan Help scheme, this type of scheme allows you to buy a portion of your property (usually between 10% and 75% of the value of the home) and make up the remaining share through rent. Further down the line, you do have the option to buy larger shares if you can afford to.

If you are looking for more information about these schemes, please feel free to contact us or book yourself a free mortgage appointment with one of our expert mortgage advisors. Another alternative is to browse the government’s OwnYourHome Web site.

Help From Elsewhere

A gifted deposit from a family member or friend can be a significant help when buying your first home. As the name suggests, gifted deposits are given with the understanding that the money does not need to be paid back and the amount you would like to gift is entirely up to you.

Review Your Outgoings 

Flick through all the bills and subscriptions you currently have. You might find that you can find cheaper deals for your mobile phone and broadband packages. It is helpful to shop around for these. More leisurely services such as gym memberships or streaming services are best to see if you get the value of your money or if there are other cheaper alternatives out there. This frees up more money to save on a deposit.

Have you considered buying a property with a friend or partner?

Buying with a friend or partner is a suitable option for many first time buyers in Leeds to get on the property ladder and can also help when it comes to saving for a deposit. Because you buy with another person, it makes savings for a deposit faster than saving from a single income. However, if one of you defaults, the other person may be responsible for the full mortgage.

There are several types of mortgages designed for those who want to buy a property with their friend or partner, these include but not limited to:

Joint Tenants

This includes both individuals who own the entire property and have equal shares in it. If one of the owners dies, the property will automatically be passed to the remaining owner. From a lender’s point of view, you are one unit so you both must agree if you want to sell or remortgage the property.

Tenants in Common 

Both owners have a certain share of the property here. This can be a popular option for relatives or friends who buy together. Because you do not have an equal share, you can act individually and have the right to sell or give away your share.

Saving For a Deposit if You Have Bad Credit

Getting a mortgage with bad credit in Leeds may be possible, however, it is likely that you have higher interest rates that could cause you to need a larger deposit. It may be best that you start by improving your credit score. Below are some ways to improve your credit score:

Register on the Voter’s Roll

This can show lenders that you have stability, so registering on the electoral roll is helpful. Make sure all the information on the form is correct with your name spelled correctly and your current address is registered. All this can be done online.

Try to Keep Within Your Maximum Limit

Maxing your card every month can have a negative impact on your score. It’s best to use a credit card and pay off your balance in full each month.

Meet Payment Deadlines 

Paying on time and in full is a great way to show a lender that you are a responsible and reliable borrower. Older and well-managed accounts usually improve your score.

Build up a Credit History 

It can be a challenge for companies to assess you if you do not have a lot of credit or none. Some people do not have as much of a headstart and find this a problem for reasons like car finances, credit cards and bills.

Close Down Any Unused Credit Accounts

If you do have any credit cards you no longer use, you must contact your providers to close the account. This can have a temporary negative impact on your score because if you close your account or provider, the credit reference cannot decipher. This should not put you off doing this as it can be a wise thing to do as it can prevent you from falling potential victim to fraud.

One of the factors that could have a negative impact on your score is being financially linked to a family member or ex-partner. Remember that you will not be able to do this if the account is still active. To do this, you must contact the credit reference agency to make a request.

Our Expert Mortgage Advisors in Leeds

Here at Leedsmoneyman, we can provide the help you need when going through the mortgage journey. We offer all our customers a free mortgage appointment which you can book yourself in for through our ‘Get Started’ process on the website. During this appointment, you can speak to one of our knowledgeable mortgage advisors in Leeds who will provide you with the support you need toward your mortgage goals. 

Date Last Edited: February 19, 2024