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  • Writer's pictureRicky Gandhi

How to get a mortgage with a small deposit in the UK


Table of Contents

  • Introduction

  • What is a small deposit mortgage?

  • Why are small deposit mortgages important?

  • How to get a mortgage with a small deposit

  • Government schemes for small deposit mortgages

  • Other ways to get a mortgage with a small deposit

  • Tips for getting approved for a mortgage with a small deposit

  • Conclusion

  • Additional information


Mortgage Small deposit

Introduction

Buying a home is a major life goal for many people, but it can be difficult to save up for a large deposit. The good news is that there are a number of ways to get a mortgage with a small deposit in the UK.

This blog post will cover everything you need to know about getting a mortgage with a small deposit, including:

  • What is a small deposit mortgage?

  • Why are small deposit mortgages important?

  • How to get a mortgage with a small deposit

  • Government schemes for small deposit mortgages

  • Other ways to get a mortgage with a small deposit

  • Tips for getting approved for a mortgage with a small deposit

What is a small deposit mortgage?

A small deposit mortgage is a mortgage where you can borrow up to 95% of the value of the property you want to buy. This means that you only need to save up for a 5% deposit.

Why are small deposit mortgages important?

Small deposit mortgages make it possible for people to buy a home sooner, without having to wait for years to save up a large deposit. This is especially important for first-time buyers, who may be struggling to get onto the property ladder.

How to get a mortgage with a small deposit

There are a few things you can do to improve your chances of getting a mortgage with a small deposit:

  • Get a good credit score. Lenders will look at your credit score to assess your risk as a borrower. A good credit score will show lenders that you have a good track record of repaying your debts.

  • Have a regular income. Lenders will also want to see that you have a regular income that is sufficient to cover your mortgage repayments.

  • Save up as much deposit as you can. Even if you can only save up a 5% deposit, it is still a good idea to try to save up as much as you can. This will reduce the amount you need to borrow and make your mortgage repayments more affordable.

  • Use a mortgage broker. A mortgage broker can help you find the best mortgage deal for your needs and circumstances. They can also help you get approved for a mortgage, even if you have a small deposit.


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Government mortgage schemes

Government schemes for small deposit mortgages

The UK government offers a number of schemes to help people with small deposits buy a home. These schemes include:

  • Help to Buy Equity Loan. The Help to Buy Equity Loan allows you to borrow up to 20% of the value of the property you want to buy from the government. This means that you only need a 5% deposit.

  • Mortgage Guarantee Scheme. The Mortgage Guarantee Scheme allows lenders to offer mortgages to borrowers with a 5% deposit. This scheme is available to both first-time buyers and home movers.

Other ways to get a mortgage with a small deposit

There are a number of other ways to get a mortgage with a small deposit, including:

  • Gifted deposit. If a close friend or family member is willing to give you money for a deposit, this can be a great way to get onto the property ladder.

  • Guarantor. If you have a friend or family member with a good credit history, they may be willing to act as a guarantor for your mortgage. This means that they will be responsible for your mortgage repayments if you default on the loan.

  • Shared ownership. Shared ownership is a scheme that allows you to buy a share of a property, typically between 25% and 75%. You can then rent the remaining share from a housing association.

Tips for getting approved for a mortgage with a small deposit

Here are a few tips for getting approved for a mortgage with a small deposit:

  • Be prepared to shop around. Compare mortgage deals from different lenders to get the best interest rate and terms.

  • Be honest with your lender. Tell your lender about your financial situation and be honest about your budget.

  • Be prepared to compromise. You may need to compromise on the type of property you buy or the location of the property in order to get a mortgage with a small deposit.

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Conclusion

Getting a mortgage with a small deposit can be challenging, but it is possible. By following the tips above, you can improve your chances of getting approved for a mortgage and buying your dream home.


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