Can I get a mortgage with 10 percent deposit?
Can I get a mortgage with 10 percent deposit? Yes, there are several 10% and few 5% mortgages out there, but it depends on your specific circumstances if you are eligible for them.
The lower the amount of deposit you are paying into the property, the higher the risk the lender is taking by agreeing to lend to you at 90% or 95% loan to value.
The reason for the element of risk at 90% or 95% loan to value is the lender must be sure that there is sufficient equity in the property should in the event they need to repossess and sell the property, they need to make sure they can get their money back.
At 90% loan to value, this means you have only put 10% down as a deposit against the property value.
What if property prices drop in the future?
If they drop more than 10% (5% with a 95% loan to value), you will find yourself in negative equity and this can be very costly to get out of when you want to move home or remortgage.
So, can I get a mortgage with 10 percent deposit? Yes, a 90% mortgage can be a great idea in the right circumstances. If you are keen to get on the property ladder, with a good income but struggle to save up the deposit you need, a 90% (or 95%) mortgage may give you that extra steep up that you need.
Loan to value…what is that ?
It is the amount of loan (the mortgage amount) divided by the property value. this gives you the percentage of the property that you are borrowing against that will be subject to the mortgage.
For example, if you are putting down a 10% deposit you are taking out a mortgage for 90% of the property value and Brokers will talk in terms of 90% Loan to Value .
If you also have a less than perfect credit history, (missed payments, late payments, defaults or CCJ’s etc) the lender will consider you higher risk and you are unlikely to be eligible for mortgage deals at a high loan to value.
Some 5% deposit mortgages are limited to new build properties, the government initiative announced earlier this year is specific to new build properties and other criteria. See our recent blog on the launch of 95% Mortgages.
If you are interested in a new build property, there are also other options to explore: see our blog about Help to Buy Equity Loans.
If you are interested in an older property, there are a couple lenders who may consider your application with 95% mortgage. This is where it is important to find a good mortgage broker who has access to lenders across the whole of the market, they can compare your requirements with the lenders criteria and find the perfect match for you.
So I hope this post has helped you answer your question: Can I get a mortgage with 10 percent deposit?
If you have any questions about how much deposit you need, please CONTACT US.
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Looking for more great mortgage news, tips & advice? Check out our last blog post: 7 Top Tips For Choosing A Mortgage Broker