Obviously, Mark Bullard, head of sales at NatWest Intermediary Solutions, says it is likely that the larger the deposit they have, the greater will be the choice of mortgage deals on offer and they are more likely a borrower is to secure a deal with a lower rate of interest.
However, Mr Bullard says they will also need to consider the rate at which house prices are rising in the area they want to live, the availability of properties, the potential increase in interest rates in the future and the amount of rent they are paying, to assess whether saving more is worthwhile.
Of course, for some in areas such as the south-east where average prices for three bedroom houses can be far in excess of £300,000, saving enough extra to make a significant difference to the mortgage rate may take more time than the client is willing to wait.
It is impossible to say generally whether first-time buyers with small deposits should delay purchasing and save a bigger deposit, says Brad Fordham, managing director of Santander for Intermediaries.
Mr Fordham says whether the best 90 per cent LTV rate available today would be more or less than say an 85 per cent LTV rate in 12 months time is difficult to predict.
To buy or not to buy can only ever realistically be answered by potential borrowers individually, agrees Brian Murphy, head of lending at Derby-based Mortgage Advice Bureau.
Mr Murphy says: “Delaying a purchase may be feasible for those who can possibly save a larger deposit relatively quickly and young potential borrowers in good employment who have moved back with, or are still living with parents.
“For many who are renting in the private rented sector and paying a landlord’s mortgage, the opportunity to save more than 5 per cent is extremely difficult.”
However, Mr Murphy says the government announcement that the Help to Buy equity loan scheme is to be extended until the end of the decade may mean that some potential borrowers will not feel the need to act as soon as they might have done.
Looking at the circumstances of the borrower, Ian Wilson, head of Halifax Intermediaries, says it is the role of the adviser to provide guidance on what may be the better option.
He says: “It is worth noting that rates on higher LTV mortgages are generally higher as this takes into consideration the risk of higher LTV mortgages.”
