How Much do I need to put down myself?
Well the more the better would be my initial answer. Those with more of a deposit will tend to get a better rate from the bank. The deposit basically becomes your Equity in the property or for a simpler term - your stake. So the bigger the stake you have then the lower the interest rate. This is because the bank knows you have a real vested interest in the property and are less likely to walk away from a big chunky deposit you have saved up over the years.
There's a couple of Banks who still have 100% mortgages but I'm not too keen on them as they are quite restrictive and in my experience tend to stop my client getting the right property for them.
There are plenty of Lenders who will lend you 95% against your first home which means you need to save up 5%. Sometimes it doesn't have to be your savings. Some lenders are happy with "Gifted Deposits" from family members so if the deposit is an issue, this may be a good option. So I would say if you have or have access to at least 5% of a Deposit, then there are lenders who we could look at. Rates tend to reduce when your borrowing is a lower percentage of the property. This is known as Loan to Value or LTV for short. So an LTV of 90% would require a deposit of 10% - An LTV of 85% would require a deposit of 15% and so on. Hopefully this makes sense. Every time your deposit increases by 5%, the rate tends to lower. Lenders have these price points to try and keep things simple. Imagine how many products would be on the market for every 1% increase in deposit. This would be just too many to deal with effectively.
How Much will the Banks Lend me?
That's quite an open ended question as it depends on quite a few different factors. Let's start with how they work out the maximum lending figure. Banks lend multiples of your Annual Salary (either sole or joint depending on how many applying for the mortgage). The maximum currently for First Time Buyers is over 5 times but the average is 4.5 - 4.75 and again depends on your deposit (your stake). So this changes from client to client but hopefully this can give you a rough idea of where the banks will lend up to.
However, there's a few other things to consider which would reduce the amount the banks would lend. If you have outstanding finance and this will continue with your mortgage, the lender needs to take this into account and will have to factor this into the loan amount which would be reduced. This depends on how much you are committed to each month. They will also need to consider other committed costs if you have children as your outgoings would be more if you have a family than if you currently don't. On the flip side to this, most lenders include Child Maintenance and Child Benefit as income which assists with the maximum loan amount.
Another key area to look into when it comes to how much the banks will lend is your Personal Credit File. If you are up to date with finance payments this should be acceptable. However, if you are missing payments this tells the lender you may be under financial pressure so why would they add another commitment to your monthly bills. If there are some minor indiscretions, I can look at the whole of the market as there are some lenders who will accept some missed payments. Unfortunaltely though, their rates would be higher to reflect this so take care when agreeing finance deals and make sure you pay on time each month. To check your file you can use Equifax or Experian as the lenders use these firms when assessing your creditworthiness.
How much will it cost me each month?
That's quite straight forward really. Once we have taken a decent look at your income and current costs, we can work out a rough budget that you would be comfortable with and then run some quotes based on how much deposit you have and your ideal property cost.
Most mortgages in the past have been for 25 years as standard. However, as property prices have steadily risen in value, this term sometimes means the monthly payments are too high for some first time buyers. So the lenders have extended their mortgage terms with some agreeing up to 40 year terms.
This may be helpfuly but you also need to consider the fact that the longer you borrow money for, the more it will cost you in interest. So it's not always right to have such an extended term. We will work through what it right for you based on your current situation. On the flip side, in the future you can remortgage and reduce the overall term of your mortgage if your income has risen and you feel you can afford to do this so don't be too concerned if you need to take a longer initial term at the outset. This can be changed further down the line.