5k Deposit mortgage
What is a 5k Deposit mortgage and how can you get one?
What is a 5k deposit mortgage?
A 5k deposit mortgage is a mortgage that allows you to purchase your first home as long as you have a 5k deposit up to a loan to value of 99%. Meaning you only require a 5k personal deposit to buy a property. So regardless of the price of the property you only need a 5k deposit, up to a maximum property price of £500k. With high rents and property prices rising, saving for a deposit can be one of the major barriers for people looking to get on the property ladder. With only a 5k deposit required this puts home ownership within reach for many more people.
Are 5k deposit mortgages actually available?
YES, On 27th March 2024 Accord mortgages launched the 5k deposit mortgage. This means you can purchase a property up to 500k with just a 5k deposit.
We understand that raising a deposit is a key challenge for many wanting to step onto the property ladder for the first time, and are committed to help more first time buyers open the door to their first home.
Who will be able to get a 5k deposit mortgage?
The product is available to those who meet the following criteria:
- At least one applicant must be a first time buyer (defined as never having owned a property in the past) and cannot own any other properties.
- Applicants with a minimum £5K deposit
- Minimum property value – 100k
- The maximum age at the end of the mortgage is 70
- All applicants must have indefinite right to reside in the UK.
What will I be able to borrow for a 5k deposit mortgage?
The maximum loan allowed will be £495k. All applications will be assessed on affordability and you will still need to be able to afford the mortgage. The maximum loan to your income will be 4.49 times your annual income however various other things will affect how much can be borrowed such as credit score and personal expenditure meaning although it may be possible to buy a house with as little as a 5k deposit you may still be limited in the amount you can actually borrow.
How do I get a 5k deposit mortgage?
The product with Accord is only available through brokers therefore speaking to an independent adviser is the easiest way to explore this option. A mortgage adviser will assess your circumstances and advise you on whether you are eligible for this product.
A mortgage adviser will review your income, outgoings, credit history and overall situation. They will be able to tell you if it is possible to get a 5k deposit mortgage or whether you will still require a larger deposit to buy a house.
So where do I start getting a 5k deposit mortgage?
Lenders will look at a number of things before deciding whether or not they will offer you a high loan to value mortgage. Your credit history, your income and outgoings. Along with your personal and future circumstances and the impact of any interest rate rises in the future.
Firstly, check your credit report!
Things like missed payments, not being on the voters roll or addresses not being updated with providers can have an impact on your credit score and therefore your ability to snap up a 5k deposit mortgage. Not sure what your credit report shows then send it to an adviser who will happily talk you through it.
Secondly, prepare your documents.
Getting together things like payslips, tax returns, bank statements, savings statements and ID can help to speed things up when it comes to getting a mortgage. Exactly what documents will be required will depend on the lender but these are usually a good starting point.
Finally, SAVE!
Just because 5k deposit mortgages are available doesn’t mean you’ll be either eligible or that they are right for you. There are a number of other costs associated with buying a property such as solicitor fees, survey fees and moving costs so be prepared with extra money for these. Also the bigger deposit you have the lower interest rates tend to be and more mortgage options you may have so if possible save as much as possible.
These are just a few simple steps if you are starting to think about a 5k deposit mortgage or any new mortgage. The simplest way however is to speak to an expert mortgage adviser who can walk you through the process. They will explain your options and advise you on the right mortgage for you. Speak with one of our friendly experts! Info@bluecrocodile.co.uk
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