Property Buying Guide
Building Deposit: Finding ‘no-deposit' Options.
Sadly, if you cannot raise a deposit, there are currently very few mortgage lenders offering 100 per cent mortgages where no deposit is required. If one is offered this would be dependent on your circumstances and may result in a higher interest rate because of the risk that the lender is more taking. Alternatively the lender make make a claim on prt of your property or require a sum of money to be placed in one of their bank accounts as surety against non-payment of the mortgage. Nowadays, there are probably no lenders who will lend considerably more than the value of the property. Realistically, you need to find a deposit. In almost all cases you will need some sort of a deposit.
A major disadvantage of 100 per cent mortgages is that if the value of your property falls, you may find yourself in negative equity. This means that you will owe more than you borrowed and you still have to pay back the lender the original price of the property. If you had taken out a 100 per cent mortgage you would have to consider carefully what you would do if house prices did not rise, as potentially you could be stuck with a house worth less than you owe on the mortgage outstanding.
There may be many routes available for you if you can get together deposit. We have listed some ideas for you to build your deposit(see below) but nothing will beat getting proper financial advice tailored to your circumstances. Do not feel that because you may have little or no deposit monies that there are no options available to you. Talk to a good mortgage advisor, who will be able to explain the possible options in more detail.
If you are a key worker , have an anual household lincome of below £60,000 or may be considered to be in housing need, a shared ownership scheme may offer you a ‘low-deposit' option. Also, with shared equity, only a 5% deposit is required.
Other possiblities are detailed in the rmeainder of this 'Building a Deposit Guide' - see links to other parts at the bottom of this page. Your best best is getting parents to help!
In some instances you may be able to borrow a deposit in order to buy a first home. It is often the case that cash-back offers, gifted deposits or 100%+ mortgages mean you are able to pay back the loan when you purchase your first home. Get a quote for a personal loan.
Find out more about how to build a deposit - or even get away without needing one:
Savings l Extra work, selling things, cutting down on spending, cutting down on debt l Gifted Deposits l A loan l Investing Abroad l Reducing the size of mortgage deposit needed