How much stricter are 5% deposit mortgages?

Leonberger

Hi everyone.

I am in the process of applying for a 5% deposit mortgage and am worried sick about it.
I know nobody can know for certain however I wondered if there were any brokers or experienced people who could tell me if the bank is likely to be much harsher with a low deposit than say a 10%?

We had to sell our house at a loss and have managed to scrape the 5% to buy a new home but can’t manage 10%.  If we don’t get the mortgage it will cause a lot of stress and will involve moving in with parents with small children hence the stress!

We have okay credit as far as I know. Both ‘scores’ show good although I’ve read here these are are rubbish indicator. No bad debt although we have a loan due to finish in 2 months time.

We were accepted for a DIP for £237k although we only need £204k so this may go in our favour perhaps?

Oh and finally they have requested 3 months bank statements, what are they looking for here? Are they judging what we spend it on or just making sure we don’t pay late etc?

Thanks! 

ACG

They are looking for salary credits, no undeclared commitments, not gambling too much etc.
I am sure you will be fine. It is harder to pass the score at 95% LTV but there are lenders who do not credit score (at normal rates) if you are struggling to pass credit score with lenders.  

Leonberger

Thank you ACG.
My mortgage advisor has said we got a pass at 5%LTV for £237k so hopefully that’s a good sign although I understand it’s just a soft search.

I have had some debt in the past which is settled and never missed a payment etc but I do worry it may come back to haunt me! 

WatchMeNayNay

If it makes you feel any better we just got a mortgage offer for 100% mortgage which I thought we had no chance of getting. I know it all comes down to your individual circumstances however.
I worried myself to death with it! The big unknown world of underwriters and passing all the mortgage hurdles!  Good luck!

[Deleted User]

As ACG says, scoring is likely to be harder at 95% (since it's higher risk than 90%), but in terms of underwriting very little in my experience.

I think on lower LTV cases the Underwriter is more likely to apply overrides / exceptions etc. and any 'borderline' things will go in your favour. But  the difference between 95% to 90% is minuscule. The key thing I've learnt is that the LTV shouldn't make or break a case - we won't do a case just because it's 10%, 20% or 30% LTV - and likewise we wouldn't decline someone because it's a high risk 95% - it would only be after reviewing all factors (of which LTV is only one).

Bank statements will be making sure you actually get paid (remarkable how many people  lose their job and don't tell us!) and aren't gambling your entire salary / missing payments etc. If you've operated your account 'normally' then I wouldn't worry