What options do I have if I have a low deposit?
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What options do I have if I have a low deposit?
Can I get a mortgage with a 5% deposit?
Lenders are a little more stringent on credit score and the maximum borrowing amount, but on the whole, yes, you can get a mortgage with a 5% deposit.
What are the requirements of getting a mortgage if I have a low income?
They are much the same as if your income level was high, you’re employed, self-employed or have benefit income. Lenders assess affordability on income multiples, so we would need to look at the whole picture before giving you a detailed answer.
What low deposit schemes are available?
[podcast recorded in January 2025]. There are a few of them.
Deposit Unlock is a scheme which enables you to buy a new build home with only a 5% deposit from one of the participating home builders.
There’s a scheme called the Key Worker Deposit Contribution, where people such as NHS staff could benefit. Shared Ownership is all explained in one of our other episodes.
There’s also the First Home scheme where if you’re a First Time Buyer, you may be able to buy a home for 30% to 50% less than its market value – but the home must be your only residence.
What should I do if I don’t have a deposit? Can I get a mortgage with no deposit?
Normally, a 5% deposit is the minimum. One lender will consider less than 5% and potentially give you a 100% mortgage, but their criteria is very tight. They need to see that you have paid rent and all house household bills for at least 12 months in the last 18.
This lender will potentially go to a mortgage payment at 120% of the rent you’ve been paying. To qualify, you have to be a First Time Buyer. There are other criteria around it, so it is only achievable for a few clients, but we are happy to have a look at these with you if you’re interested.
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Can my parents lend me money for a house deposit?
There’s only one main lender that is happy with you using a loan as a deposit. In most scenarios, it would have to be a gifted deposit, where your parents don’t ask for the money back and have no entitlement to the property.
Gifted deposits are accepted from parents with almost all lenders. Some lenders allow gifted deposits from other close relatives, too.
Can I get a mortgage if I have a low deposit as a First Time Buyer?
Yes. As mentioned, it’s normally 5% as a minimum, but one lender will consider less than 5% and even offer a 100% mortgage – but their criteria is very tight.
Can I get a mortgage with a low deposit if I have bad credit?
It is possible, but lenders are stricter on a 5% deposit than with lower Loan to Values. We can try, but it depends on how bad things are or have been. We need to look at the whole situation in detail to check the likelihood of this for you.
Can you get a Buy to Let mortgage with a low deposit?
No, the minimum deposit for a Buy to Let is 20%. Most lenders seek 25%, but a couple will do a 20% deposit.
Do you have any tips for people with a low deposit?
It is good to save up at least 5% as you will open up a lot more lenders than the 100% Loan to Value option. Even though the interest rate is slightly higher, due to the risk factor, this is a far better option to get onto the property ladder than paying rent.
How can a mortgage broker help? Have you got anything else you’d like to add?
We can help you every step of the way – from finding out how much you can borrow right up until the day you move in. We’ll guide you through the whole process from start to finish and help you along the way.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY TO LET MORTGAGES.
Useful Links
- First Time Buyers
- Agreement in Principle
- First Time Buyer Joint Mortgage
- Self-Employed Mortgage First Time Buyer
- First Time Buyer New Build Mortgage
- Joint Borrower Sole Proprietor
- Gifted Deposit Mortgage
- How much deposit do you need for a mortgage?
- Shared Ownership Mortgage
- Do I Need a Guarantor?
- What options do I have if I have a low deposit?
- Interest-Only Mortgage for First Time Buyer
- First Time Buyer Self-Build Mortgage