4 Things To Consider Before Getting A 5% Deposit Mortgage

Banks will begin offering mortgages to buyers with a deposit of just 5% this week, as the government-backed 95% mortgage scheme commences.

The scheme will allow both first-time buyers and current home owners to secure a mortgage with a 5% deposit, to buy a house for up to £600,000.

Mortgages with a 5% deposit existed before the pandemic, but lenders have been reluctant to dish our high loan to value (LTV) deals amidst the turbulent economy.

Under the scheme, the government will offer to take on some of the risk of low deposit loans, meaning lenders would have some protection from potential losses.

Clearly, the huge benefit of a 95% mortgage is that it makes homeownership a possibility for people who were previously unable to get on the property ladder.

This might appeal to you if you’re currently spending a lot on rent, are sick of dealing with landlords, or you’re currently living with family or in a flatmate situation that’s run its course.

But there are pitfalls to consider with a high loan to value mortgage. Here are a few things to bear in mind.

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