95% Mortgage for 19 year old - Advice

navidson

_Penny_Dreadful said:

navidson said:

Hello all - My stepson is currently exploring the possibility of moving out of the home and getting a mortgage on a flat with his partner.  He has steady full-time employment and earns a decent amount - and his credit score is over 900.

He has enough of a deposit saved up to cover 5% of the property - and has started to look at signing up for a 95% mortgage.  However, he has been discouraged whenever he has tried to make an application as each bank has only offered the 90% option (even though they stated that 95% would be available before application was made)

Is anybody aware of any banks/lenders that currently offer 95% mortgage deals for young people?  He has tried using the usual aggregators (Compare the Market etc) but they seem to have led him down the garden path with their suggestions?

Thanks in advance!

My guess is that whilst mortgage lenders do offer 95% LTV mortgages your step son doesn’t pass affordability. I’m not sure of his employment situation but I imagine as a 19 year old his salary isn’t that high, or at least not high enough to sustain a 95% LTV mortgage. 

He earns around £25k and is looking to purchase a £60k flat - so would require around a 55k mortgage

BungalowBel

navidson said:

_Penny_Dreadful said:

navidson said:

Hello all - My stepson is currently exploring the possibility of moving out of the home and getting a mortgage on a flat with his partner.  He has steady full-time employment and earns a decent amount - and his credit score is over 900.

He has enough of a deposit saved up to cover 5% of the property - and has started to look at signing up for a 95% mortgage.  However, he has been discouraged whenever he has tried to make an application as each bank has only offered the 90% option (even though they stated that 95% would be available before application was made)

Is anybody aware of any banks/lenders that currently offer 95% mortgage deals for young people?  He has tried using the usual aggregators (Compare the Market etc) but they seem to have led him down the garden path with their suggestions?

Thanks in advance!

My guess is that whilst mortgage lenders do offer 95% LTV mortgages your step son doesn’t pass affordability. I’m not sure of his employment situation but I imagine as a 19 year old his salary isn’t that high, or at least not high enough to sustain a 95% LTV mortgage. 

He earns around £25k and is looking to purchase a £60k flat - so would require around a 55k mortgage

Why is the flat 60k?  If it is because of a short lease,  (less than about 80 years) that may also be a problem.

Tabieth

My advice (FWIF based on knowing very little) is not to buy at 19. Instead save money for a bigger deposit and focus on university / work and spreading one’s wings and not being at school. Flat / house sharing is fun at that age and is a rite of passage. 

And 60k for a flat is very cheap. I’m assuming it must be a studio flat with a short lease and maybe not in a great location.  That’s not a great buy and certainly isn’t a good investment. 

kingstreet

He is probably failing the lender's scorecard for 95% and being offered 90%.

A 95% mortgage will need the highest possible score on a lender's card, so (for example) being in current job for 3+ years; at current address 3+ years; same bank account for 3+ years and so on, to qualify.

There are lenders who don't credit score. They tend to be smaller building societies and are best found by smart experienced brokers.

ReadySteadyPop

Exodi said:

"A mortgage scheme designed to increase the number of deals available to homebuyers with a low deposit or limited equity has now ended. Several major lenders took part in the Government's mortgage guarantee scheme – which ran until June 2025 – where want-to-be homeowners had better access to 95% mortgages."

https://www.moneysavingexpert.com/mortgages/new-mortgage-scheme-for-5-deposit/

Since the government is no longer offering to absorb most of the potential losses of these mortgages as of the end of June, unsurprisingly they're being pulled. Apparently something should replace it, but I wouldn't hold your breath.

95% LTV mortgages do exist without the guarantee, but the interest rate will inevitably be hefty due to the significantly increased risk of negative equity from house price movements.

How many people used this scheme?

ReadySteadyPop

Tabieth said:

My advice (FWIF based on knowing very little) is not to buy at 19. Instead save money for a bigger deposit and focus on university / work and spreading one’s wings and not being at school. Flat / house sharing is fun at that age and is a rite of passage. 

And 60k for a flat is very cheap. I’m assuming it must be a studio flat with a short lease and maybe not in a great location.  That’s not a great buy and certainly isn’t a good investment. 

Very few flats are a good investment now, a cheap flat (low debt) could be a good idea in this environment though.

https://www.investmentweek.co.uk/news-analysis/4516105/uk-gilts-truss-ousting-levels-reeves-speculative-market-marred-decisions-former-government

gwynlas

Whilst it seems like a good idea to get on the housing ladder sooner rather than later at 19 he is very young  both to moving in with a partner and buying.
Young adults do not physically reach maturity until 25 hence many dropping out of university, frequently changing jobs not knowing what they want etc.
Yes some people are childhood sweethearts and stay together for many years but many change as they age, feel they are missing out on the social scene, travelling and exploring life.
I would encourage anyone at this age to think carefully about where they see themselves in the next 5 or ten years and save up at least a 10% deposit to get a better mortgage rate.

ReadySteadyPop

gwynlas said:

Whilst it seems like a good idea to get on the housing ladder sooner rather than later at 19 he is very young  both to moving in with a partner and buying.
Young adults do not physically reach maturity until 25 hence many dropping out of university, frequently changing jobs not knowing what they want etc.
Yes some people are childhood sweethearts and stay together for many years but many change as they age, feel they are missing out on the social scene, travelling and exploring life.
I would encourage anyone at this age to think carefully about where they see themselves in the next 5 or ten years and save up at least a 10% deposit to get a better mortgage rate.

The flat is only 60k, they can rent it out when they go travelling?

Tabieth

ReadySteadyPop said:

Tabieth said:

My advice (FWIF based on knowing very little) is not to buy at 19. Instead save money for a bigger deposit and focus on university / work and spreading one’s wings and not being at school. Flat / house sharing is fun at that age and is a rite of passage. 

And 60k for a flat is very cheap. I’m assuming it must be a studio flat with a short lease and maybe not in a great location.  That’s not a great buy and certainly isn’t a good investment. 

Very few flats are a good investment now, a cheap flat (low debt) could be a good idea in this environment though.

https://www.investmentweek.co.uk/news-analysis/4516105/uk-gilts-truss-ousting-levels-reeves-speculative-market-marred-decisions-former-government

There must be a reason why it’s so incredibly cheap. Whatever that reason is, it’s unlikely to be a good investment. 

ReadySteadyPop

Tabieth said:

ReadySteadyPop said:

Tabieth said:

My advice (FWIF based on knowing very little) is not to buy at 19. Instead save money for a bigger deposit and focus on university / work and spreading one’s wings and not being at school. Flat / house sharing is fun at that age and is a rite of passage. 

And 60k for a flat is very cheap. I’m assuming it must be a studio flat with a short lease and maybe not in a great location.  That’s not a great buy and certainly isn’t a good investment. 

Very few flats are a good investment now, a cheap flat (low debt) could be a good idea in this environment though.

https://www.investmentweek.co.uk/news-analysis/4516105/uk-gilts-truss-ousting-levels-reeves-speculative-market-marred-decisions-former-government

There must be a reason why it’s so incredibly cheap. Whatever that reason is, it’s unlikely to be a good investment. 

I believe they are buying it to live in, not as an investment. 60k is a reasonable chunk of debt for a 19 year old, especially with higher rates, any higher than that could get uncomfortable if mortgage rates spike.