The amount of deposit you need to purchase a home in Beverley will entirely depend on your situation and what your property plans are. In this article we take a look at how much you might need.
Why do I need a deposit anyway?
In the past, it was easy to get 100% mortgages and even higher. This thankfully is not the case anymore, as it is of a higher risk to mortgage lenders. Think about it, if you are borrowing 100% of the purchase price, fall into arrears and then the property price dips, that mortgage lender is at a loss.
This is why the mortgage lender needs a deposit, so that need you to put down a deposit simply to reduce their lending risk. There is also the frame of mind that investing your own money into a property makes it less likely for you to walk away if finances get difficult.
Furthermore, it could be argued that if you are not able to save up at least a 5% deposit, are you even ready to take on such a large financial commitment like a mortgage?
Won’t the government pay the deposit for me?
No, they cannot. Previously there existed the Help to Buy Equity Loan Scheme, though this has been discontinued.
I have a 5% deposit – is that enough?
At the moment, yes 5% is enough in lots of circumstances. Not all mortgage lenders will accept only a 5% deposit though so your options are more limited and normally you will need a reasonable credit score to qualify.
There are mortgage lenders out there that would consider you for a 95% mortgage with an average credit score but the rate of interest would be higher.
My credit history is poor – how much do I need to put down?
Many of the specialist lenders want you to put down at least 15% deposit if you have a poor credit history, once again as above this is simply to reduce their risk in case a repossession occurs.
It is much more difficult to obtain this type of mortgage than it was in the mid-2000s but it’s not impossible.
What about buy to let?
You’ve always needed to put down a larger deposit for buy to let mortgages in Beverley and most lenders at the moment are looking for 25%.
The Financial Conduct Authority does not regulate some types of buy to let or commercial mortgages.
Can I take out a loan for the deposit?
This could be possible but the vast majority of lenders won’t let you do this, essentially this would still be 100% lending.
Can someone gift me the deposit?
Yes, this happens all the time. Generally, it’s “Bank of Mum and Dad” gifting or other family members but even family friends can gift you money as long as they can evidence the funds, prove who they are and confirm they are not expecting repayment of the gift.
Are there any circumstances at all where I don’t need a deposit?
If you are buying as a sitting tenant at a discount from the open market value, from a family member or if you qualify for a discount under the right to buy in Beverley then normally you don’t need to put any of your own money in as the equity is already “built-in” to the deal.
Please note that the above information is for reference purposes only and is not to be viewed as personal financial or mortgage advice.
Date Last Edited: January 17, 2024
