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How to Save For a Mortgage in Newcastle

As a first time buyer in Newcastle, making that first step onto the property ladder may seem overwhelming. It goes without saying, that ensuring a good credit score and providing a sufficient deposit for a mortgage is a huge part of this process.

Working out how much you need to save for a mortgage in Newcastle

To estimate how much you need to save for a mortgage in Newcastle, begin by calculating your monthly disposable income. This is done by subtracting your monthly expenses from your income.

The result gives you an idea of how much you can allocate towards your mortgage savings each month. It’s a great way to set tangible and attainable savings goals.

Most high street lenders will require a minimum deposit of 5% of the property value. However, some first time buyers set their sights on saving around 20% of the property’s cost or more if possible.

A larger deposit usually decreases your monthly payments and can open you up to more favourable interest rates. If you have bad credit in Newcastle, you may be required to put down a higher deposit anyway. This is could be around 10%-15%.

Keep in mind that a mortgage is borrowed money, hence the more borrowed, the more interest to pay back. To figure out how much you’ll borrow for your mortgage, speak with a mortgage advisor in Newcastle.

Don’t forget to set some money aside for the additional costs of buying a property. Along with this, your mortgage and protection advisor will provide you with various insurance or coverage options for your property.

Are there any mortgage schemes in Newcastle?

A host of government schemes are available to assist first time buyers in Newcastle. For example, the Shared Ownership Scheme provides for those not able to afford a mortgage on 100% of the home. This unique scheme allows you to purchase a share of your property (typically between 10% and 75% of the home’s value), with the remaining share covered via rent. More detailed information can be found on the government’s OwnYourHome website or by scheduling a free mortgage appointment with us.

There are more initiatives that you can benefit from, such as the Lifetime ISA, RIght to Buy and many more. Each scheme differs and can help different types of applicants. You will not meet the criteria for every scheme, so you must look at each criteria before applying.

Help from elsewhere 

A gifted deposit can also be a big boost in your homeownership journey as a first time buyer in Newcastle.

A gifted deposit is exactly what you would expect it to be. It is a lump sum of cash gifted to you from a family member or friend to use towards your housing deposit.

A gifted deposit is strictly a gift, not a loan to be repaid at a future date. The person providing the gift will have to sign an agreement that this is a gift and not a loan.

Review your outgoings

Evaluate how you use your current income. There might be an opportunity to reduce expenses like mobile phone and broadband packages or discretionary services like gym membership or streaming services. Cutting down on these can free up more resources for your deposit.

Buying a property in Newcastle with a friend or partner

Don’t hesitate to rely on purchasing property together with a friend or partner. This approach can essentially half the time it would take you to accumulate a deposit.

Be aware that in cases of default, the other party will be responsible for the entire mortgage. Options like Joint Tenancy and Tenancy in Common exist for individuals considering this route.

Saving for a mortgage with bad credit in Newcastle

Should you have bad credit, you might face higher interest rates and could be required to provide a larger deposit.

It may be a smart move to focus first on improving your credit score. There are many different ways to improve your credit score in Newcastle, such as sticking within your maximum credit limit, meeting payment deadlines, building a credit history, closing down unused credit accounts and removing financial ties with over parties.

Getting mortgage advice in Newcastle

We at Newcastlemoneyman are ready and willing to provide guidance and advice on your mortgage journey.

We offer a free mortgage appointment to all our clients where we’ll work hand-in-hand to achieve your mortgage goals. Simply book your free mortgage appointment online and select a date and time that suits you! We have weekend and evening availability also.

Date Last Edited: February 12, 2024

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