Which lenders could help you buy a home with just a 5% deposit
11th September 2019
If you’ve been trying to save towards buying a home, you’ll know just how hard it can be to get enough money together for the deposit.
This means first-time buyers have been putting down an average deposit of £32,841, with those in London stumping up £110,656, according to the same research.
It’s a lot of money, but don’t despair.
Thankfully some lenders could offer you a mortgage if you’ve only got a 5% deposit. Read on to find out who.
Lenders that accept 5% deposits
There are around 90 lenders in the UK and about a third of them offer mortgages for people with a 5% deposit.
These lenders include: (2)
Post Office/Bank of Ireland
Lenders don’t stipulate any special criteria to get this type of mortgage, but you’ll need a good credit score.
The drawbacks of putting down a 5% deposit
Putting down only a 5% deposit on a home may seem the answer to your prayers, as it could get you on the property ladder much faster than you’d hoped.
But there are considerable disadvantages to putting down such a small deposit:
lenders will charge a higher rate
your monthly repayments will be higher than they would be with a larger deposit
you’ll end up paying more in total than you would with a larger deposit because of the amount of interest you’ll have to pay
most lenders are looking for a close to perfect credit score
Is buying a home with a 5% deposit right for you?
Think carefully before deciding to take out a mortgage with a 5% deposit.
One of the first things you need to make sure of is that you can afford the repayments. If you’re not certain what they’d be, get some free advice from a mortgage broker.
“A mortgage with a 5% deposit can be a big help, but whenever you’re borrowing money you need to be sure you can pay it back,” said Sam Amidi, a mortgage adviser at Trussle.
(1) Lloyds Banking
(2) Twenty7Tec August 2019