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The minimum deposit you will need to put down on your first mortgage is typically 5% of the property value, leaving you with a loan-to-value (LTV) ratio of 95%. This can be made up from savings, family gifts, government schemes or a combination of these etc.
For example if you are purchasing a £200k property, you’d need a minimum of 5% deposit which is £10k, and then you’d apply for a 95% mortgage for £190k to cover the purchase price.
However, not all lenders offer mortgages with this low deposit requirement, and there may be others rules and lending criteria to meet. But it’s best to speak with an experienced broker to discuss 95% mortgages and reccommend relevant options based on your individual circumstances.
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Yes, this is defintely possible. However, as lenders consider low deposit mortgages riskier, they’ll usually charge higher interest rates to compensate for that. If possible, it can be worth saving longer for a 10% deposit to get a cheaper mortgage deal. If you’ve only in the position to put down a 5% deposit, finding the most suitable low deposit mortgages oftern require expert guidance from a trusted mortgage broker.
Looking at whether you can get a deposit with a low deposit will depend on the following factors:
A low deposit mortgage is designed for people who only have a relatively small amount of deposit, but want to get on, or move up, the property ladder. If you’re a first time buyer with savings worth 5% of the house you wish to buy, a low deposit mortgage can be an option you can buy a property.
Banks that offer 95% mortgages will each have their own affordability assessments and criteria surrounding them. Therefore, it’ll be useful to engage the services of an experienced mortgage broker to help you find the most suitable deal based on your personal situation.
If you already own a property and looking to move up but your equity is only worth 5% – 10% of the value of your home then you may need a low-deposit mortgage when it’s time to remortgage.
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A low deposit mortgage is designed for people who only have a relatively small amount of deposit, but want to get on, or move up, the property ladder. If you’re a first time buyer with savings worth 5% of the house you wish to buy, a low deposit mortgage can be an option you can buy a property.
Banks that offer 95% mortgages will each have their own affordability assessments and criteria surrounding them. Therefore, it’ll be useful to engage the services of an experienced mortgage broker to help you find the most suitable deal based on your personal situation.
If you already own a property and looking to move up but your equity is only worth 5% – 10% of the value of your home then you may need a low-deposit mortgage when it’s time to remortgage.
Taking on a low deposit mortgage can get you onto the property ladder sooner. Saving for a mortgage deposit can take time, so the smaller the deposit you pay, the quicker you could buy your first home.
Interest rates on low deposit mortgages will normally be higher. The bigger the deposit you save, the more likely you’ll get a lower interest rate. This is because you will have a high loan to value ratio.
We're flexible around your work and family, we'll be there when you need us.
No upfront fees payable, we are paid on results only.
You'll always know who you are dealing with.
Getting your first mortgage can be a daunting experience. We’ll hold your hand all throughout the process.
We'll recommend appropriate insurance products to ensure you can stay in your home, should you become seriously ill or unable to work.
We shop around for the cheapest deal for you, saving you time and money.
There isn't a situation we haven't come across before, we fully understand your needs.
We'll help you overcome hurdles that you face along the way, for example, removing the stress of property survey and valuation problems.
Despite having bad credit, first time buyers can still access some mortgages with a low deposit, it all depends on when your bad credit was and the severity.
The main examples of bad credit can include, county court judgements (CCJs), defaults, and missed payments. Here at UK Moneyman we’ve worked with a large panel of mortgage lenders including some that specialist in helping customers with bad credit mortgages.
Getting a low deposit mortgage is the same whether you are employed or self-employed, there’s no different in the mortgage journey, just how your evidence your income.
For a low deposit mortgage application you’ll need to evidence your income in the form of:
Even with a County Court Judgement (CCJ) on their credit record, borrowers might be able to secure a low deposit mortgage with a CCJ. CCJs typically indicate past financial issues, but lenders may still offer mortgage options with favorable terms. Borrowers may need to evidence improved financial stability or provide additional documentation to strengthen their mortgage application.
If you are currently renting and your landlords has offered you to purchase the property you’re living you may be able to get a low deposit mortgage to cover this.
Often, when buying off a landlord they might offer you a slight reduction in the asking price as a sale to a tenant would save them money by not paying estate agency fees and allowing them to receive rent right up to completion.
If your landlord is offering you any discount this can help keep your mortgage payments lower as you’ll be borrowing less money.
For first time buyers who are struggling to save up for a 5-10% deposit, gifted deposits offer a solution. Family members or other benefactors can provide funds to cover the deposit amount, enabling borrowers to access low deposit mortgages.
Lenders may require documentation to verify the source of the gifted deposit and ensure it meets their criteria. A gifted deposit must be a gift. It cannot be a loan and there must be no agreement to pay back the money.
The shared ownership could be another way to buy a property with a low deposit mortgage.
Under the shared ownership scheme, you are able to buy a share of the property, normally between 25% and 75% initially, and then pay rent to a landlord on the remaining share. Over time, you can, if you choose, purchase additional shares (a process known as staircasing) until you own the house outright. You only need a mortgage and deposit, which could be as little as 5%, on the share you want to buy.
For example, let’s say you want to buy a property worth £200,000 and decide to start with a 25% share. For this share you’ll need to pay £50,000, and so could apply with as little as £2,500 as a deposit if you want to get a 95% LTV mortgage.
There are criteria about who can buy a house through the shared ownership scheme and what kind of property you can buy, so check the government website for more information or one of our mortgage advisors about how it might be an option for you, or if we can find anything more suitable.
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UK Moneyman Limited is Registered in England, No. 6789312
Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
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UK Moneyman Limited is Registered in England, No. 6789312
Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
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