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
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 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.