So, we all want to know if 5% deposit mortgages are going to make a comeback. They disappeared from the market when the pandemic hit the country last year and have not been seen since.
Smaller deposit mortgages have started to appear again with a range of 10% deposit mortgages coming back when they were desperately needed by first time buyers. But what about 5% ones?
At present you can only get a mortgage with a 5% deposit if you are using one of the Help to Buy schemes such as shared ownership or the Help to Buy equity loan, but people want to know when they might be able to buy a house with a smaller deposit without using a scheme.
This week there have been rumours that a major mainstream Lender is discussing a return to the 5% deposit market. There is no clue as to who this lender is yet and it is still only a rumour but let’s hope this is true.
As with a lot of things mortgage related, once one lender does it, we can expect to see more lenders follow. The more lenders who make these mortgages available the better it is for potential buyers.
However, if they are to make a comeback soon, you should expect to see the criteria for these mortgages tighten. You are likely to need a good credit history and a stable income. Lenders will remain ultra-cautious so expect extra scrutiny on your bank statements and any other documents you may be asked to provide.
So, at present there is nothing major to report regarding the 5% deposit mortgage making a comeback, but we all hope they won’t be too far away from returning.
Keep an eye out for further news but for now, to summarise, the only lower deposit mortgages available are 10% unless you look at the Help to Buy schemes.
For further information, and any questions you may have, please contact your local mortgage broker.