Mortgage calculator: What property can I buy with my down payment?
Buying property in the UK is a long drawn out legal endeavor.
For the vast majority of those who cannot afford to buy directly, there is a mortgage.
This means that a lender, often a bank, loans the majority of the value of a property to the buyer.
However, most save a down payment to help them make that purchase.
Your deposit is not the only factor that affects the value of the property you can buy.
How much you earn is also an important factor.
However, there are times now where lenders require buyers to have a deposit of at least five percent of the value of the property you have chosen.
Of course, depositing a higher deposit means you are borrowing less and it is possible.
However, if you are planning to deposit the minimum deposit, this is what you could potentially borrow.
What can you buy with your deposit?
Â£ 5,000 deposit = Â£ 100,000 of property value
Down payment of Â£ 7,500 = property value of Â£ 150,000
Â£ 10,000 deposit = property value of Â£ 200,000
Â£ 15,000 deposit = property value of Â£ 300,000
Deposit of Â£ 20,000 = property value of Â£ 400,000
Â£ 25,000 deposit = Â£ 500,000 property value
Â£ 30,000 deposit = Â£ 600,000 property value
However, many would advise you to deposit a larger deposit to reduce what you borrow.
Having five percent of the value of the property you want to buy does not guarantee that you will be accepted for a mortgage.
There are a number of mortgage calculators on the internet that Brits can use to determine their chances of being accepted for a mortgage, including the one provided by Citizens Advice.
Many banks also offer their own mortgage calculator.
What are the different types of mortgage rates? Buyers have a number of different mortgage options to choose from.
First, the homeowner needs to decide whether they want to go with a fixed rate mortgage or choose a variable option.
Fixed rate mortgages have the same interest rate for the entire repayment, or an agreed upon period, which means that the amount of the monthly payment will not change.
On the other hand, with the tracker mortgage, the owner will choose a percentage of the interest rate that he will always pay as the base rate.
In the past, money saving expert Martin Lewis has provided advice on mortgage lending, including how to find the cheapest deal.
In June, he said: ‘New figures released by Halifax show house prices hit a record high in May, with the average UK house now worth Â£ 237,837, up 5% in one year.
âOne of the main factors behind this is that borrowing is extremely cheap, making it easy for people to take out new mortgages on the cheap and buy or upgrade easily. “