10% Deposit

[HettySunshine]

It's a bit crazy that I don't know this as I work in property law, but my husband and I met in our mid-30's and out situation was save for 5 years to buy a house or to have children, so we decided to have children and have always rented.

My il's have decided they want to release some equity from their house and give my dh and his siblings £25k each.

We're going to use ours to buy a house - something we never thought we'd be able to do.

So anyway, if we have a £25k deposit, does that mean we will only be able to buy a £250k house? We could afford to pay a bigger mortgage than that, we both earn quite well. Is it worth holding off for a while and trying to quickly save a bit more money? Or can we get a bigger mortgage if we can show that we can meet the repayments?

We will get a broker in due course, but just after some general info while we're in the very early stages. Thank you

I think some banks are doing 95 per cent mortgages but im not sure if it’s just for new builds? Best to speak to a broker x

You might be able to get a deal where you just need 5% deposit. I'd get in touch with some lenders and ask. Remember you also need funds for solicitors fees etc.

There are lots of 95% LTV mortgages out there atm but you really get penalised with high mortgage rates.

There are even a few 100% ones, if you feel like paying through the ear!

Tbh it doesn’t really get much better until you have a 20% deposit. So you would need another 25k plus circa 6k for removals, fees, etc. If buying past 31/03 FTBs need to pay stamp duty over 300k, before then there is none payable up to 425k.

If you are settled and can afford a house you know you won’t want to leave for many, many years, you might as well suck up the higher mortgage rate for a few years and buy on 95% LTV. Trying to overpay each year will shorten the term so when you come to remortgage for a new term, which will reduce your monthly outgoings.

Be very aware of the pitfalls of negative equity if you think you might need to move again within 5-10 years.

In theory you could buy a 500k house with a 5% deposit but if you are looking to borrow that much with such a small deposit, the number of lenders willing to lend a high amount to you vastly shrinks. We were looking at 465k with 5% last year and I think we had a choice of 3 from our broker. It was going to be 2248pm over a 33 year term O_O

>if we can show that we can meet the repayments?

Sorry, I just noticed this part. Mortgage lenders love to see people repaying debt on time every time. Credit cards, loans, car payments. Do you have any of those and are they always paid on time?

Perversely, the are more reluctant to lend to people with no debt or credit (bc they want to see a steady history of timely payments).