The Rise of Low and No Deposit Mortgages

With increasing house prices and the cost of living rising, saving a deposit for your first property can be a daunting prospect and usually the biggest barrier for first-time buyers. There is a current trend in the market of lenders offering increasingly higher loan-to-values with some offering mortgages with as little as £5,000 deposit or even no deposit if you meet their strict criteria.

Could this be an option to consider and what are the risks as well as the rewards? There are a few points worth considering when making the decision to borrow the maximum available mortgage.

The lower the deposit you put in, the greater the risk that a drop in house prices could see you owe more than the property is worth. This in turn could lead to difficulties refinancing at the end of the fixed rate. Another consideration is that higher loan-to-values generally come with higher interest rates. This could make the monthly payment less affordable meaning it may not be the solution for everyone.

The positives should be clear for all to see, whether it is having your own space, getting out of rental accommodation and avoiding spiralling rents or just setting down some roots. Getting on to the housing ladder is a major step for most people and the ability to borrow a higher percentage of the purchase price could make it easier to save a deposit and turn home ownership dreams into reality.

With more lenders now joining the low and no deposit market, all with different propositions, researching to make sure the product and rate you pick is right for you is the real key along with seeking professional advice.