£5k Deposit Mortgage
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What is the £5k Deposit Mortgage?
The £5k Deposit Mortgage is a mortgage exclusively for first time buyers that allows you to buy certain houses with just a £5,000 deposit.
This is compared to other mortgages, where typically at least 5% of the purchase price is needed as a deposit, which can be difficult to save up for. With the £5k Deposit Mortgage, you only need £5,000!
Who is eligible?
The £5k Deposit Mortgage is only available to first time buyers, meaning someone who has never owned a property before. If you are applying with somebody else, at least one of you needs to be a first time buyer, and neither of you can own any other properties, such as buy to lets.
In addition, all applicants need to have indefinite right to reside in the UK.
Can I buy any property with the £5k Deposit Mortgage?
No. The £5k Deposit Mortgage is only available if you are buying a house that is not a new build.
The following are not acceptable:
- new build houses
- flats
- any property in Northern Ireland
The purchase price also needs to be between £100,001 and £500,000. This is due to the minimum (£95,001) and maximum (£495,000) loan amounts available on this product. You also need to pass affordability checks to make sure you can afford the proposed mortgage amount.
Are there any other restrictions on the mortgage?
The maximum term is 40 years, but the mortgage can’t go beyond the eldest applicant’s 70th birthday.
It has to be on a capital repayment basis, too.
As of September 2024, the only rate available is a five year fixed rate.
Finally, all applicants must have permanent right to reside in the UK.
How much can I borrow?
No more than 4.49 times your income as an absolute maximum. This will likely be reduced if you have any debts – such as credit cards, car finance, student or personal loans – or if you pay maintenance or for childcare.
Can I apply if I have bad credit?
An enhanced credit scoring system is in place for this mortgage, so you’re unlikely to be accepted.
We might still be able to help, however. Read our page on bad credit mortgages to find out more.
Why The Mortgage Store Chorley?
Exclusive rates you won’t get directly from lenders
A dedicated point of contact from initial enquiry right through to completion and beyond
Appointments seven days a week, to best suit your schedule
Ongoing rate monitoring until completion as standard
Do you have a question?
Can I use a guarantor?
No. A guarantor mortgage is a special mortgage in and of itself, so it can’t be combined with this.
Are gifted deposits acceptable?
Yes, as long as they are from an immediate family member.
Pros and cons of the £5k Deposit Mortgage
Pros
- You only need a £5,000 deposit
- Five year fixed rate gives you time to build some equity
- Gifted deposits acceptable
- 99% loan-to-value available, meaning you could buy a more expensive house if you pass affordability and credit checks without needing a minimum 5% deposit
Cons
- High loan-to-value means you risk being in negative equity if house prices fall – you could owe the bank more than the house is worth
- You still need additional funds for things like solicitors and surveys
- You may not be able to remortgage elsewhere until you have built up at least 5% equity in the property
- Enhanced credit scoring means even people with no bad credit might be refused
- You still need to pass affordability checks
- No choice of products, just a five year fixed rate on a capital repayment basis
- No flats, no new builds, and no properties in Northern Ireland
How can The Mortgage Store Chorley help with the £5k Deposit Mortgage?
Ready to buy your first home? At The Mortgage Store Chorley, we understand the challenges facing first time buyers. That’s why we’re committed to helping you secure your dream home with the £5k Deposit Mortgage option.
We’ll guide you through the process, making buying your first home a piece of cake. Say goodbye to stress and hello to your new home! Contact us today to get started.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
