How do deposits & mortgages work?

[Flower Child]

If I paid a deposit of £10,000, what would the price range be on a property? I live in Middlesex so it's quite expensive but I'm 18 so I'm none the wiser to this house stuff...help!
I earn 11K a year at my job....I'm never gonna be able to get a house :-(

My boyfriend and I are saving £100 a month so it'll take us 5 years just to get 10K which by the sounds of things, won't get us anywhere!!

[Knownow't]

Generally Mortgage companies want a 10% deposit...so you could put £10,000 down as a deposit and get a £90,000.00p Mortgage on a house worth 100K
That wont get you much in Middlesex....you can get more than a 90% mortgage, but you then start to have to pay extra additional costs which can mount up and in some cases can be as much as £2000 but thats the basics, go and ask at a Bank they will be more than happy.

[clair]

You can't get a mortgage based on the amount of deposit you have although the more you have the better the mortgage deals (on the interest rates) will be. Generally though if you had a £10k deposit, you could in theory buy a £100k property depending on your financial circumstances (10% deposits are the average). Companies take into account who you're buying with and how much you earn, generally it's about 3/4 times your annual income which doesn't buy you a lot these days!

You may also find it difficult cause of your age. Good luck anyway!

[Domino]

5% of a £200,000 property, leaving you with a mortgage of £190,000. The minimum income/salary needed to borrow that would be around £42000 a year, based on a high multiple of 4.5 times salary.

10% of a 100,000 mortgage, leaving you £90000 to borrow, minimum income of £20000 a year.

[crusty cham]

If it`s worth more than you`re paying for it you may not need a deposit.

[lausie]

Mortgages tend to work on an annual salary and what you can afford principle.

Generally, banks will lend about 3.5 times your salary so if you earn £25,000 a year they might be prepared to lend you £87,500 for your home. If you have £10,000 saved for a deposit it would mean that you could look to buy a property for about £97,500.

However, you have to take into account how much you can afford to pay each month (and remember those other costs like Service Charge, Council Tax, Water, Electricity & Gas etc).

If you're serious about buying, you might also want to look at the shared ownership scheme which allows you to purchase a percentage of the property whilst 'renting' the remaining share from a housing association thus allowing you to take a nicer house for what you can afford.

I can't help but think you are very young to buy a house though. Its a BIG commitment so think carefully about it and if you decide to proceed - get an independant financial advisor to help you!!

[Mina S]

I believe the answer you're looking for can be found on this site. They've got lots of info about the subject.

[StephE]

You can get 100% first time buyer mortgages. They carry a slightly higher rate of interest and a higher arrangement fee. Go to an independent mortgage advisor, they can sort out all the paperwork for you and let you know what you will need. The standard starting deposit for a mortgage is 5% of the total amount borrowed, for example a downpayment of £5000 on a £100,000 property. Different lenders also calculate how much you can borrow always based on your current income, both individually and joint.
When you are young with no family to support its the ideal time to make a start and don't be afraid to borrow close to your limit. My husband and I did when we bought our first place and it has paid off for us and the result is we own more of the home we are now in than the bank does (its taken us 13years but its worth it).