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Original poster

5% mortgages

50 replies

Frolicacid · 11/04/2018 13:30

Just wondering if anyone has any experience of applying for a mortgage recently with a 5% deposit? We’re going on a second viewing on Saturday at a house that needs some work. A smaller deposit would allow us to get the work done a lot sooner.
I’ve had a brief email conversation with our broker, and she thinks it’s a viable option. The asking is 100k under what she calculated we could borrow, so we’re not stretching ourselves too far. We’d just like to get the work done as quickly as possible.
Has anyone got any positive or cautionary tales to share before I get my hopes up?!

TIA.

OP posts:
RedHelenB · 11/04/2018 15:21

We bought both our houses on 5 % deposits but that was a while ago. House is now double the original value 20 years on.

19lottie82 · 11/04/2018 15:26

Not applied for one personally but my understanding is that your credit history ect must be squeaky clean to be approved and the interest rate will be higher than if you had a larger deposit.

Eminybob · 11/04/2018 15:30

I work for a lender and we are offering 95% mortgages with no problem. Even first time buyers. If you have any issues with your credit history then it is going to make it harder, but provided you are reasonably clean and affordability is ok then there should be no probs.

The thing for you to consider is the interest rate though. It is going to be a lot higher with a 95% mortgage.

CarrotPuff · 11/04/2018 16:05

I would put as big a deposit as you possibly can. Your monthly repayments will be lower and mortgage repaid faster in the long term. And less interest to pay.

Original poster
Frolicacid · 11/04/2018 16:14

Thanks all for your replies.
eminy that’s heartening to hear. We are ftb. Affordability check gave us up to £220k and this is £120k, so should be ok. Credit history is fine. We both have small car loans, but no other debt and no defaults at all.
We were thinking of fixing for a year or two, getting all the work done straight away; Then overpaying / saving as much as possible to remortgage on a better rate.
Maybe it’s not as impossible as we first thought 🙂

OP posts:
crisscrosscranky · 11/04/2018 16:23

Perfectly possible - find a good broker!

Whether it's a good idea though... consider that carefully. A 95% mortgage and a housing bubble (at least here in south east) is a recipe for disaster. I'm concerned about a crash and we have 40 % equity

RedHelenB · 11/04/2018 16:51

If you are planning on staying there awhile I wouldn't worry about a housing crash, plus you will be adding value by updating it no doubt.

Original poster
Frolicacid · 11/04/2018 17:16

We are definitely not in any housing bubble areas.
It would likely be a long term, if not forever home. We’ve been waiting for a house to come on the market in the village for donkeys. It has scope to add space / value in years to come as well as the immediate modernising work.
I’ve just got off the phone with our broker who was very positive. Couldn’t see any reason that we wouldn’t be approved, especially as we will have cash available for the renovations.

OP posts:
cupcakesandglitter · 11/04/2018 17:22

FTB just moved into our house with a 5% mortgage 😊 had no trouble in getting one

Outnumbered99 · 11/04/2018 18:15

Sounds like a perfectly reasonable plan to me Frolic, good luck with the renovations!

Original poster
Frolicacid · 11/04/2018 19:50

Thank you outnumbered.
Congratulations on your new house cupcake.
I’m allowing myself to get a little bit excited. Pinterest, here I come!

OP posts:
sall74 · 11/04/2018 19:59

Eminybob - It is so heartening to hear that your employer is carrying out all the same reckless, irresponsible practices that led to the last bubble and financial crisis, encouraging people to over leverage and take on ever higher levels of mortgage debt for probably their entire working lives... you must be so proud to work for them.

Crochetnanigans · 11/04/2018 20:03

We took a 95% mortgage 5 years ago. Ftb. Term of 15 years. We managed to rejig things and now only have 7 years left.

Horses for courses

Eminybob · 11/04/2018 20:14

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sall74 · 11/04/2018 20:20

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Crochetnanigans · 11/04/2018 20:23

Just wow.

Take no notice

Idrinkandiknowstuff · 11/04/2018 20:24

Spot the bitter renter who can’t get a mortgage.

Eminybob · 11/04/2018 20:31

Lol. Well my employer’s strapline is “can’t pay, kiss you kneecaps goodbye” so sall has a point.

(Not really, I work for one of the most responsible lenders on the high street and am proud to say so)

StormcloakNord · 11/04/2018 20:38

Debt pushing scum...

Someone's a bit bitter. Jealousy is a cruel mistress Grin

Original poster
Frolicacid · 11/04/2018 20:40

Holy moly!
No need for that at all sal. Maybe head over to AIBU if you are looking for an argument.
Thanks to everyone else who has answered constructively, especially eminy 💐

OP posts:
FridayNightFun · 11/04/2018 20:45

We've just been given a mortgage in principle for a 95% mortgage. No issues.

Our mortgage repayments will be 60% of our rent right now.

bobsandboo · 11/04/2018 20:50

We needed a high LTV mortgage a couple of years ago and were advised to go for 94% than 95% if we could manage as it was a slightly better rate. We took a 2 year fixed so we could get a better deal more quickly when LTV dropped below 90%. It wasn't the best financial decision we could have made and we have probably overpaid on interest for a couple of years but it was a means to an end to get our forever home.

Xenia · 11/04/2018 21:17

We have had 95% before now. It has always paid off.

MovingAgainOhWhy · 11/04/2018 21:25

I think Sall would rather people that can only get a 5% deposit due to high house prices rot away in cardboard boxes forever, or just suffer in the private rental market were rents are higher than mortgage payments anyway....

sall74 · 12/04/2018 06:05

In the run up to the financial crisis of 2008 there were hundreds of thousands of people, especially FTBers, who were giddy with excitement at getting 95% mortgages and finding themselves on the fabled ''property ladder'' and there were plenty of lenders falling over themselves to lend the money to them whilst turning a blind eye to the systemic risks involved.

We all know what happened next, resulting in the tax payers bailing out the feckless borrowers and the reckless lenders and a whole raft of measures used to keep the banks in business and the property bubble inflated... all at the expense of the wider economy and society in general.

So yeah, you all rejoice in your 95% mortgages over 35 year terms taking up historically high record proportions of your take home pay... safe in the knowledge that when it all turns to shit again the taxpayers will bail you out once more and we can have another decade or more of austerity and stagnant wages, combined with asset price inflation, making the poor poorer and the wealthy wealthier.

Oh and btw I'm not a bitter renter, I bought my house decades ago and can't even remember when I paid my mortgage off it was so long ago, so personally I couldn't really care if house prices continue to the moon or collapse spectacularly.