How much you will need to save before you can purchase a property will vary depending on its value.
Most mortgage providers will request a minimum deposit of 10% of the property’s value. However, first-time buyers may be able to reduce this amount by taking advantage of various schemes that are currently available. Examples of such schemes are government funded Help to Buy schemes, shared equity and shared ownership schemes.
Loan to Value is a term used by mortgage lenders to describe the ratio of a loan in relation to the value of the property. This is usually portrayed as a percentage, reflecting the percentage of the property that is mortgaged and the amount that is owned by you (your equity).
As well as your deposit, you will need to think about a range of other costs that are part of the house-buying process:
For certain mortgage products there will be an arrangement fee to pay; this is usually in return for a lower interest rate. Arrangement fees are also known as product or application fees and they can either be paid upfront or may be added to the balance.
To purchase a property you will need to appoint a solicitor or conveyancer to act on your behalf. They either charge you a flat fee, or a percentage of the value of the property. These costs cover the the legal work associated with buying a home such as conveyancing and searches of local authority data. Look at The Law Society's website to find a suitable solicitor. When you are ready to select a solicitor we can help, we also have a recommended panel of solicitors to handle the legal side of purchasing your first home.
These are fees usually charged by a broker or an IFA (Independent financial advisor) for arranging your mortgage. There may also be fees to pay in return for the mortgage advice you receive. Ensure that you check this upfront. If you receive advice from The Co-operative Bank's mortgage advisers you'll not be charged for receiving advice.
Whether you have been living in an unfurnished or furnished property previously, it is likely that you will need to purchase home furniture for your new home. It is vital that you account for any furniture you'll need to buy and any necessary decorating in your savings plan to avoid any disappointments.
This covers the valuation of your home and the assessment of the valuation. Mortgage lenders will require a valuation to be completed on the property that you are looking to purchase.
Lenders will insist that you have some form of buildings insurance in place for your home by the completion date. Ensure that you factor in this cost in your planning.
When you are buying a home you will also need to take into account stamp duty. Stamp duty is a tax that is charged as a one off when you purchase a property. The amount of stamp duty you pay is linked to the purchase price of the property.
Please see our stamp duty calculator to see how much you may be charged.
Your home may be repossessed if you do not keep up repayments on your mortgage