You have just tied the knot, and now you are ready to move into your dream home. You want to know how much of a deposit you need to put down on your home so that you can afford the payments in the future. Properly planning for your future finances will help reduce stress. A proper down payment will reduce additional costs associated with buying a house.
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Shop around for a house in a price range you are comfortable in purchasing. Remember that there are many other costs associated with buying a house other than just the purchase price. For example, a couple finds a house for £91,000 and estimates other expenses, such as closing costs, to be £3,250. Therefore, the total house price is £94,250.
Consult with your Realtor, accountant or anyone else who knowledgeable in house payments to determine a good down payment. Typically, a homeowner should shoot for a 20 per cent down payment. A down payment of this size gives you more equity in the home immediately, and lower lifetime interest costs, because you're paying off a smaller loan. Lenders generally require a 20 per cent down payment; however, they may accept 3 per cent to 5 per cent if you carry private mortgage insurance--another expense you can avoid with the larger down payment.
Multiply the total price of the house by the recommended down payment. In our example, £94,250 x 20 per cent = £18,850 for the down payment on the couple's dream house.
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