UK MORTGAGE CENTRE
Can I Buy A House Without A Deposit
March 13, 2023
In the UK, buying a house without a deposit is possible but challenging. It involves obtaining a 100% mortgage, covering the full property cost. However, most lenders typically require a deposit for risk mitigation
What’s a Deposit?
A deposit is a sum of money that the buyer puts down towards the purchase of the property. It is usually a percentage of the total price. It serves as a guarantee to the lender that the borrower is committed to the purchase and can afford the repayments. In the UK, the typical deposit is around 10% of the property’s value, although some lenders may accept as little as 5%.
Some lenders do offer 100% mortgages, although they are less common than they were before the 2008 financial crisis. These mortgages can come with higher interest rates and stricter lending criteria, as the lender is taking on more risk by providing a loan without a deposit. This means that the buyer will need to have a good credit history and a steady income to be considered for a 100% mortgage.
Should I Use A Guarantor
Another option for a First Time Buyer who is unable to raise a deposit is to use a guarantor. A guarantor is someone who agrees to pay the mortgage if the borrower defaults on the repayments. This can be a parent or grandparent etc. They will need to have a good credit history and be willing to take on the responsibility of the mortgage if necessary.
Is Shared Ownership Good For A First Time Buyer
*UK Mortgage Centre is a Trading Style of The UK Mortgage Centre Group. The UK Mortgage Centre Group is authorised and regulated by the Financial Conduct Authority – FRN 826982. Registered in England & Wales: 11614569. As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments. The Financial Conduct Authority does not regulate some forms of buy-to-let mortgages. The Financial Conduct Authority does not regulate will writing and taxation and trust advice.