Getting on the property ladder is hard! With at least 5% of the property value required to get a mortgage and average house prices in the UK currently standing at over £220,000, it’s a pricey endeavour.
So it’s tempting to consider taking out a loan to fund a mortgage deposit and you may already have looked at this as a serious option.
There are no lenders, at the time of writing, who promote mortgage deposit loans. And that’s because of the concern over affordability.
Let’s say you buy a house at the average price of £220,000. That means the deposit you need is £11,000 (plus all the fees associated with buying a house).
Taking out a relatively large unsecured loan for £11,000 could leave you with a sizeable repayment each month, which reduces the affordability of your mortgage repayments.
On that basis, many lenders will ask you to prove the source of your deposit.
If you are saving for a mortgage deposit, don’t forget about the additional costs:
The above, as the minimum, are fees you should be saving alongside your deposit.