So, you have decided to buy a home and now you are thinking how much cash do you actually need? We are here to help you. Of course, this is all theory and assumptions and your mileage may vary, so please take it as guidance.

When we talk about buying property, we usually refer to something called “a mortgage”. This is when you take a loan from a bank or a specialist lender in exchange for the right to repossess the property you are buying if you don’t keep up with your repayments or if you are in breach of contract. Your property then becomes security. In addition to it, the lender will require you to put a down payment - a deposit - which will demonstrate your intentions to meet your contractual obligations.

DEPOSIT

You need to have saved up at least 5% of the value of the property you are buying. 5% is an absolute minimum but as a rule of thumb, buyers tend to have at least 10-20% and more. There are a few important things to remember:

1. The larger the deposit, the less is the loan, and therefore, the less interest you are going to pay throughout the term of the mortgage.
2. The larger the deposit, the better is the deal. To some extent, increasing the deposit may help you get a better deal from the lender.
3. The smaller the deposit may increase the term you may have to commit to, and therefore, you may see an increase in interest you have to pay.

LENDER FEES

Depending on the mortgage product, the fees may vary. There are products with no upfront fees but there are also products with the fees going up to a couple of thousand pounds. If a particular product has upfront fees, it doesn’t make it less competitive or more expensive - paying fees upfront may help you secure a better deal (i.e. lower interest rate). If your initial budget is restricted, you still can take out a mortgage with upfront fees, only in this case, the fees will be added to the loan and attract interest.

CONVEYANCING COSTS

If you are buying a property, you will need a chartered conveyancer or a solicitor to take care of the legal side of things. Not only they will charge you for their work but also ask you to pay for disbursements (various searches and checks, bank transfer fees, stamp duty land tax (SDLT)). We must emphasise how important it is to have a good solicitor - one small mistake or oversight can cost you a fortune. Average conveyancing fees are between £800 and £1500, and the disbursements can reach another £1000 or more depending on your situation. If you are a first-time buyer, you may avoid paying the SDLT altogether but in some cases, it may reach up to 15% of the purchase price.

MORTGAGE ADVISER FEES

At Insito, we charge a flat-rate fee. The fee is charged for the work that our advisers do for you - we put hours and hours of work into getting you the best suitable deal and provide really good advice. Please refer to our website for more information on the fee but please be assured that we will always let you know how much you will have to pay us before any business commences.