Small Deposit, Big Dreams

Martin Green, Director, J&M Green Mortgage Services Ltd

Struggling to save a large deposit? Independent mortgage adviser Martin Green explains how new low and even zero-deposit mortgage options could help renters get on the property ladder sooner than they think

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My name is Martin Green from J&M Green Mortgage Services Ltd on Allerton Road. I’m an independent mortgage adviser with 20 years of experience, and my firm has completed well in excess of 10,000 mortgages over the years.

So often, people think the deposit is the biggest stumbling block to buying a house. While that can be the case, there are many options people are unaware of. We regularly get enquiries from those struggling to save, thinking they need £20,000 to £30,000 to buy a house, and others who’ve saved for years not realising they could have bought a lot sooner.

Currently in the UK, nearly nine million households rent privately or socially. The FCA (Financial Conduct Authority) is working hard to bridge the gap between renting and ownership. They’re reducing affordability restrictions, easing criteria, and enabling lower deposit options through innovative products. The easing of regulation means that alongside more traditional methods like Shared Ownership or guarantor mortgages, mainstream lenders are now offering small or even zero deposit mortgages.

Recently, Santander, Accord, Newcastle, and Skipton have all released small or no deposit mortgages, and other lenders are expected to follow suit.As this trend grows, more high street banks are likely to offer low deposit options. Santander and Newcastle offer 2% deposit mortgages, and Accord or Newcastle can accept a deposit of just £5,000. Skipton is blazing a trail with its Track Record Mortgage, which allows renters with a 12-month rent history to secure a mortgage based solely on their rent payments – with no deposit required.

One high street lender will also allow you to borrow your deposit via a personal loan if it fits within the overall application affordability, so if you have a high income but are trapped paying a high rent that is preventing you from saving a deposit, that could be the perfect solution. Whilst taking a mortgage with a smaller deposit brings risks – mainly the chances of falling into negative equity if house prices reduce – lenders often try to protect against this by offering these products over a five-year fixed rate to help mitigate the risk.

The rates on these mortgages are often higher than traditional mortgages or 95% mortgages, but they may still prove more affordable than renting and allow you to get on to the housing ladder sooner.

In summary, whether you’re renting, living at home, or have owned before, low deposit options are expanding, and coupled with savings initiatives such as the lifetime ISAs, you might be closer to owning your next home than you think!

Get in touch on 0151 230 0909 or visit www.gmsltd.co.uk for more information on low deposit mortgages

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