Raising a deposit for your first home

By Melinda Varley

The costs associated with buying a first home have risen by 94% in the past six years, with increases in house prices and charges hitting mostly first-time buyers hard.

While first-time buyers in 2000 needed an average of £4,698 to cover stamp duty,

Interest Only Home Loans: An introduction to the workings of an interest only mortgage.
Foreign Currency Mortgages. What are they and what are the risks?: Foreign currency mortgages could save you a lot of money but the risks are high. This article explains.
Mortgages and Loans. Islamic finance avoids interest.: Muslims are forbidden by the teachings of the Koran to pay interest. This means that conventional mortgages and loans cannot be used. This article explains the alternatives available for Muslims and defines some of the words used in Islamic finance.
Mortgages. Exit fees to be capped.: After years of lenders having a free hand to increase exit charges, the FSA steps in to restore fairness for consumers. This article explains.
Mortgages. Big changes in the buying and selling of houses.: In mid summer 2007 everyone who wants to sell a property will have to prepare a Home Information Packs before they put it on the market. This article explains what the Packs will have to include what they'll cost - and whether we expect them to work!
Mortgages. Short term advice: There are some new lower rate “lifetime” home loans coming onto the market. How do they fare against the even lower rate “shop around” options?

Life Insurance News

solicitors' bills and mortgage fees, in 2006 the average became £9,113 making it even harder to raise a deposit on your first home.

A deposit is the amount of money that you will be required to put forward to the purchase of a property, with the balance made up from mortgage finance.

The size of your deposit may affect the interest rate you pay for some mortgage packages - such as, the more you put down as a deposit, the lower the rate of interest.

A typical deposit would be 5-10% of the total price of the property. Therefore, if you were required to provide a 10% deposit and the purchase price was £100,000 you would need to put down a £10,000 deposit.

Consider that most lenders will also look at your disposable income when lending you money and will take into account your existing loans. It is also possible that with house prices being so high, you may need some help with getting together a deposit.

You may find a few lenders who will look at 'lending you a deposit' as part of the overall mortgage package. However, a major disadvantage of this could be if the value of your property falls, you may find yourself in negative equity. This means that you could end up owing more than you borrowed.

If this is your situation, it is important that you take the correct advice. It is imperative that you do not over commit yourself to a mortgage. If you do, your home could be at risk if you cannot keep up repayments and you could end up in court fighting to keep it.

You could instead decide to take out a personal loan to use as a deposit. A personal loan is one of the least complicated financial products available but like anything, you will need to be sure of the terms before signing an agreement.

There are two types of personal loans offered by lenders such as banks and building societies: secured loans and unsecured loans.

A secured loan is one where the property will be used as security on the loan. If you aren't able to pay off the loan according to the terms agreed with the lender, then your property may be at risk of repossession. As a first-time buyer this would probably not be a relevant loan for you unless a member of your family were to take out a secured loan to help you.

Click here for page 2

Today's Tip
Don't buy direct from a Life Insurance Company until you have received at least two life insurance quotes from a specialist life insurance broker. That way you're bound to get a great deal.

Today's Tip
If you get a quote for life insurance from your bank or even directly from a Life Insurer, you may well find that it's very expensive. Online life insurance brokers tend to provide the cheapest quotes. That's because they widely search the market for you - so their life insurance quotations are likely to be much cheaper.

Did you know?
Last year the average Buildings Insurance premium went up by 1% to just over £205 and the average for Contents Insurance premium rose by 2% to £151. But within the overall market we've seen some much bigger rises - one insurer has pushed its premiums up by 6%. That's why is pays to get a range of home insurance quotes - and never accept the first you get.

Did you know?
Last year the average Contents Insurance premium rose by 2% to £151 and the average Buildings Insurance premium increased by 1% to just over £205. But within the market we've seen rises of as much as 6%.That's why if you want cheap home insurance , it pays to get a range of quotes off the Internet - and never accept the first quotation you get.