Low deposit mortgages
Low deposit mortgages underwent a huge revamp in 2013/14 still going strong into 2016, with the government and lenders working together to produce a range of creative and mainstream solutions to buying without any savings.
Since the credit crisis, many borrowers have been hard pressed to qualify for even a sparsely available 90% LTV mortgage. More recently as lenders appetite to lend has increased things have drastically improved, so much so that there’s now loads of lenders offering 90% deals making the market much more competitive. What came next was the re-introduction of 95% deals by one or two tentative lenders who were very selective on who qualifies, and then the most recent development of the new government Help to Buy schemes – Help to Buy 1 and 2.
Help to Buy 1 was for customers buying new build properties with 5% deposit, and most recently – Help to Buy 2, allowing customers to buy any property with 5% deposit. The prospect of higher rate lending with the backing of 15% worth of government security has attracted several more lenders into the 95% market. This, coupled with the funding for lending scheme (where lenders can borrow at very cheap rates from the Bank of England), has introduced more cash and better rates across the board. Don’t expect rates to be low forever though!
So what’s the lowest deposit needed for a mortgage?
The lowest deposit for mainstream purchases is currently 5%, however it is possible to get a 100% shared ownership mortgage with certain specialist lenders (brace yourself for a 9%+ rate and some hefty arrangement fees!). Alternatively, there are a handful of lenders accepting 100% mortgage applications where the 95% mortgage is supported by a 5% unsecured loan.
How you raise this deposit is generally up to you, although some sources are unacceptable to certain lenders. Visit our page here for a breakdown of which deposits are acceptable for mortgage purposes.
If you want to know how to get a low deposit mortgage, and for more info on what’s available to you if you are struggling to raise enough cash, visit our how to get a low deposit mortgage page.