10th March 2016

Mortgage Myths and Misconceptions: Do I have to have 10 % deposit?


A common misconception with mortgages is that the lowest mortgage you can get is a 90% of the property value. You provide a 10% deposit of the property’s value and the bank allows you to borrow the rest. However, you can actually get 95% mortgages and even 100% mortgages, but 100% mortgages are a lot harder to come by.

95% mortgages were introduced recently alongside the Help to Buy scheme. Before then, the lowest deposit you could use was 10%. The government introduced the help to buy scheme to encourage 95% mortgages. The obvious benefit for this is that the deposit needed is much smaller and therefore isn’t as hard to obtain by the applicant. Not all lenders will allow you to have a 95% mortgage meaning choices are a bit limited but with our whole of market scope we have access to the lenders and can guide you through the process.

When looking to take out a 95% mortgage, lenders will have a certain criteria you have to fit before they consider the mortgage with you. They’ll look to see if you have: a good credit record, sufficient income, and they’ll run an affordability check on you. They run through all this so they have evidence that you’ll keep up with your mortgage payments and that you can actually afford to take out the mortgage in the first place.

Even though 100% mortgages do exist, they are very rare. There are many risks with these, the main one being the high probability of the applicant landing with negative equity. Almost all lenders will advise applicants against these.

If you would like to talk to us about 95% mortgages or any of our other services please call 01603 750000

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