5% Deposit Mortgages

Buying your first home can be costly. You’ve got your deposit to save up for, conveyancing fees, and everything else that comes with purchasing a home. For first-time buyers, people on low incomes, and pretty much anyone in this current climate, getting on the property ladder can be challenging. This is where the government home-buying schemes can really come in handy, making it more achievable to purchase a home. 

What is the 5% deposit scheme? 

One of the government’s home-buying schemes includes the 5% deposit mortgages. This is where you will take out a mortgage for 95% of your new home’s value, and you will only need to pay a small 5% deposit. This means that if your new home is valued at £270,000, you will need to put down a deposit of £13,500 rather than £27,000. This makes saving up for a house deposit and, in general, purchasing a home much more straightforward. 

Does it only apply to first-time buyers? 

No, 5% deposit homes aren’t exclusively available to first-time buyers. The scheme is designed to make buying a home more achievable, whether for first-time buyers or those who have bought before. This is possible through a government-backed guarantee that provides lenders with peace of mind. 

Am I eligible for the 5% deposit mortgage? 

To be eligible for a 5% deposit mortgage, you must meet the following criteria: 

• The property you’re buying is going to be your home, you won’t be able to use a 5% deposit for buy-to-let properties, second homes or anywhere you’re not going to be residing permanently 
• You will need to take out a repayment mortgage; interest-only mortgages don’t qualify for the 5% deposit 
• You must have a good credit score to be eligible for a low deposit, as most lenders will view this as an increased risk 
• You must be buying a home that costs less than £600,000 

Things to consider 

• By putting down a 5% deposit, your monthly mortgage payments will be higher, so you will need to budget for this 
• 95% mortgages can sometimes mean higher interest rates, again increasing your monthly repayments 
• Specific lenders might exclude the use of 95% mortgages on new-build properties or properties over a specific value 
• If the value of your home drops, this could result in your home being worth less than what you have left to pay on your mortgage, making it harder to move homes 
• Not all lenders allow 5% deposits, so you may be limiting yourself when it comes to searching for mortgage deals 
• Although you won’t have to save as much for your deposit, you will still have other upfront costs to take into consideration, such as conveyancing fees and surveys 

5% deposit new builds 

Although some lenders won’t offer the 5% deposit mortgage for new build homes, there are still a lot of options out there if you’ve got your heart set on a brand new home. Many major lenders do support 95% mortgages, such as: 

• Santander 
• Barclays 
• HSBC 
• Natwest 
• Virgin Money 

So if you’re looking for new homes in South Staffordshire, you’re in luck! You can purchase with a 5% deposit through any of the lenders listed above. Whether you’re a first-time buyer looking for a 3-bedroom house, a family looking for a fully detached 4-bedroom property to be your forever home, or someone looking to downsize to a bungalow, we have something for everyone at County Town Homes.