The costs of buying  - The deposit

Required Reading


The costs of buying - The deposit

The biggest first cost of buying -although it's not normally spoken of as such -is the deposit that you will have to find for the property yourself As you will see from the following sections, the 'normal' amount that a building society will lend is 80% of the amount they value the property to be worth (which may well be less than the price you have agreed to pay).

Diligent searching among potential lenders may enable you to find one that is willing to lend in excess of this, though you are likely to be asked to take out extra insurance in the form of a mortgage guarantee policy. You should aim for a minimum of 10% of the purchase price to put down as a deposit, and preferably more.

As soon as you have found a property and agreed a price with the owner, you will be asked to put down a deposit as a sign of your good faith. This is normally lodged with the estate agent who is handling the sale (be wary about giving it direct to the owner). The agent holds the deposit -£1100 is the usual figure -as 'stakeholder' and it is returned to you in the event that the property sale does not go through.

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The costs of buying

It comes as a nasty shock, as you laboriously save towards your first deposit, to realise that an uncomfortably large chunk of your savings is going to have to disappear down the black hole known as 'moving costs'.

Some building firms have special schemes for first-time buyers where they guarantee to pay at least some of these, in particular the legal costs. You may suspect they can afford to do this only because they've pushed the price up by that little bit in the first place.

This may not in fact be the case. As in any other business, builders are dependent on cash flow and it could be worth their while cutting into their profit margins to get the cash rolling in. Anyway, if these costs . . .... see: The costs of buying

Current Mortgage Offers

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