How much of a deposit do I need is one of the most common questions people have when it comes to buying a new London home. Deposits are important as it is one of the single biggest factors in how much a mortgage provider will lend you for the purchase of a property. The bigger the deposit you have, the more they may be willing to lend to you and the better the mortgage rate will be.
Expert Mortgage Advice
As experienced London mortgage brokers we have helped many different types of people with both large and small deposits get the mortgage they need to purchase a property or re-mortgage one they already have at a better rate. Whether you are a first-time London buyer just pulling together your first deposit or a nearly retired downsizer with a large deposit we can help you get the best mortgage for your circumstances.
Is there a minimum deposit?
In the past 100% or even 110% mortgages were available (at a price), but today lenders’ criteria is much stricter and you will need some sort of deposit to purchase a home with a mortgage. In recent years a 20% deposit has become typical but there are also a lot of mortgages for less – 10% and even 5% deposits are becoming more and more acceptable in today’s competitive mortgage market. There are also some great rates to be had for those that have more.
There is no ‘one deposit percentage fits all’ as the best mortgage and situation for you will be as unique to your circumstances as you are. That is why the services of an experienced London mortgage broker are so important when you are looking to finance a property purchase. As mortgage advisors we are experienced in searching the mortgage market to find appropriate 5% deposit mortgages to help get you on the property ladder, along with scouring smaller providers for great deals for those of you with substantial deposits.
Good Mortgage Deals
As a general rule the bigger deposit you have for your property purchase, the cheaper the mortgage deal will be. To be able to access the most competitive rates in the current market you will normally need a deposit of 25%, for the best deals 35% or 40% deposits may be required.
If getting on the property ladder is the most important thing to you and you only have a small deposit, there are a number of 90% and 95% mortgages out there.
Help to Buy and New Buy Schemes
There are also schemes set up by the government that have been created to help those with small deposits. These schemes offer first time buyers with small deposits the chance to buy a house with between 5% and 20% down. There are some different rules for these mortgages and whether you should apply for a mortgage under a scheme or an ordinary mortgage will depend on the property you want to buy and your individual circumstances.
Other Options
If saving a realistic deposit to buy a home is not possible for you then there are some alternative ways to proceed. Shared ownership schemes are now available, also shared equity options, along with buying a property with a group of friends or looking at family offset mortgages that are now on offer from some lenders.
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