The Return of 5% Deposits
It's good news for first time buyers as we see the return of 5% house deposits and 95% LTV mortgages!
The new scheme will be put in place by the government in a bid to fire up the housing market and help people will small deposits get a foot on the property ladder.
In Layman's terms, it means you can buy a house with just a 5% deposit (rather than a 10% one which is usually the minimum) as long as you meet the mortgage lender's criteria. As you can imagine, that makes buying a house way more affordable!
Most banks cut the 95% LTV mortgage during the pandemic but with the housing market needing a boost, they are obviously happy to take more of a risk with the mortgages they are lending.
The 5% deposit scheme will launch in April 2021 and is not just restricted to first time buyers or new build properties which means there's more flexibility for people who want to buy their next home or don't want a brand spanking new house. However, there is a £600,000 limit on the property price.
In addition to the return of 5% deposits, there is also talk of the stamp duty holiday being extended another three months.
Now I know this all sounds fine and dandy but before you get your hopes up, you need to remember that mortgage providers will only lend to people with a regular income regardless of how much of a deposit you have saved. You may have £20,000 in the bank but if you have a low salary, it may be difficult for your mortgage offer to be accepted.
Saying that, the new 5% deposit scheme could be a real gamechanger for prospective house buyers who have savings already and a regular income so if you're in a position to buy, it's definitely something worth looking into.
- 5% deposit and 95% LTV mortgages are back
- Smaller deposit makes it easier for people to buy
- Launches in April 2021
- Not restricted to first time buyers
- Not restricted to new build properties
- £600,000 limit
- You must still meet the mortgage lender's criteria
- Talk of the stamp duty holiday being extended
Will the new 5% deposit scheme help you get on the property ladder?