Thoughts

Funding Your Home Deposit

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It’s so exciting to be in a position where you want to purchase your first home. You are going to be the person in charge of all the decisions in your home and it’s an empowering position to be in. The only problem that most people have is in funding themselves for their purchase, but never fear – we’ve got solutions for all. Moving to a new property is stressful enough, and if you can come up with more ways to fund your purchase, wouldn’t you want to?

Below we’ve put together a list of ways you can inject some cash into your new property purchase. We’re talking looking into grants, into a sell annuity payment to gather the cash and some extreme savings tips. Let’s dive right into all the ways that you can gather your resources and make your move happen now and not wait around any longer.

  • Cash. Cash is the easiest, simplest way to purchase a property. You need to prove where the money is coming from, of course, so that you won’t be accused of money laundering, and you need to think about how you explain a huge wedge of money like that. There are several places you can bring cash to the table, including selling your previous house and keeping the money in the bank, releasing any equity from a property, downsizing to live in a smaller place in order to save some cash on what you spend per month.
  • Savings. If you’ve been (not fortunate) blessed with an inheritance windfall, it can be used to go towards funding a new property. You’ll own a house outright and you won’t incur additional costs of arranging a loan in the first place. You can even purchase a property that other lenders won’t usually lend against. If you have savings for 6-12 months, the bank will be satisfied that you can manage your money well.
  • Mortgage. You can put down a percentage of the money you owe in total and complete a property purchase with a mortgage this way. Usually, at least 5% of the purchase price is needed with the bank or lender and then the difference is borrowed with a charge on the property. Buying with a mortgage in place will allow you to leverage your cash, then enabling you to afford a more expensive property than if you paid just cash.
  • Family. Some families – the lucky ones – are in a position to help with the costs of a deposit. If you know that you can ask a parent and they can guarantee the loan for you, you’ll be in a much better position than most borrowers. It’s always a good idea to ensure that you have the money long enough from family and a guarantor the bank can trust. You should consider whether this is a gift or whether your family member needs you to repay this loan in the future, too. You don’t want your new home to be a contentious issue or come with strings attached!

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