Can you get a mortgage with a 5% deposit?

SamanthaD85

We are first time buyers and have been to Halifax to enquire about a mortgage and they said they will give us a mortgage up to a certain value based on our income. But they were unclear on how much deposit we needed. We dont have any other out goings like loans etc just our car insurance. We are both still living at home and have never rented or owned our own home before.
The house we would like to try and buy is under the amount that Halifax would lend us, so we were wondering if you can get a mortgage based on a 5% deposit. We do have a mortgage promise from them which expires in 6 months.

We are aware of other fees involved and would have enough to cover those and the 5% deposit.

Just thought i would ask on here as its a Sunday we cant phone Halifax until tomorrow.

Thanks any advice would be appreciated.

GMS

May be possible to find a property where the vendor is willing to contribute a 5% deposit too, which, with your 5% will mean an LTV of 90%.

Speak to Halifax and see what they say.

xcapade

From what I can see on my screen Halifax will lend based on 90% LTV as GMS mentioned an additional 5% incentive from Halifax would really help you.

You need to remember due to high amount of money you are borrowing you will be charged a "Higher Lending Charge" which are calculated on the difference between 75% of the value of your home and the amount you wish to borrow. You will also pay a higher rate of interest due to the small amount of deposit you have and finally you will need to take out a Capital and interest (repayment) mortgage. It is not available on Interest only.

From the information I have just sourced:: Builder/Vendor deposit max acceptable 5% of lower purchase price or property value. So they are happy to lend if you are looking to purchase a new build property with a builders incentive.

Hope that helps

(Please note none of the information above is in any shape or form advice)

GMS

New build maximum 80% as far as I know.

SamanthaD85

When we went to Halifax they said they would lend us £115,000 which is decent for us as the houses prices are about that where we are looking. But the house we have our eye on has the asking price of £95,000. We do have a 10% deposit for that but that would leave us with no extra money for other things if we need it, thats why we were going to look into a 5% mortgage if there were any.

Shall have to have a shop around.

GMS

90% mortgage are the maximum aside from a handful of building societies.

If you can get 10% deposit then this is the way to go. If you can negotiate a 5% vendor deposit in addition then you may well find much better rates, although not all lenders allow these.

SamanthaD85

GMS wrote: »

90% mortgage are the maximum aside from a handful of building societies.

If you can get 10% deposit then this is the way to go. If you can negotiate a 5% vendor deposit in addition then you may well find much better rates, although not all lenders allow these.

How do the vendor deposits work?

GMS

SamanthaD85 wrote: »

How do the vendor deposits work?

If the lender allow it you would proceed with the purchase at £x. The cash deposit you have would be placed with the solicitors, and the lender would advance the loan which would be 5% short (vendor deposit).

So if the sale price was 100k, the vendor would receive 95k.

opinions4u

Based on what others have said on here take a look at:

Yorkshire Bank
Clydesdale Bank
Nottingham Building Society
Skipton Building Society

Posters have reported these lenders offering 95% over the last few months.

Beware higher lending charges which can be significant in these cases.

dizziblonde

We had a mortgage discussion interview with The Nottingham who were offering a 95% deal at the time (back in July - don't know if things have changed since then). The income multiples were so small that it wasn't viable, their criteria was such that my entire income was disregarded and I basically didn't exist - they couldn't find anything to help us.

23rdspiral

unless the house is a wreck, no heating ect, i'd seriously consider using all your potential 10% as the amount you'd save in interest repayments over the lifetime of the mortgage might be worth a few months of icky kitchen, poor shower, ugly carpets ect... that's what we did when we moved into our current place 7 years ago, and whilst we couldnt have the 'new house warming' party immediatly, it was worth it for us in the long term. good luck.