Is it possible to buy a property without a deposit?
When looking for a mortgage, you typically need at least a 5% deposit, but there are 100% mortgages out there. In addition to this, there are ways to put down a deposit without having to save up the cash yourself. Be aware though, that you will still need funds for stamp duty, solicitors fees and surveying fees.
Landlord Gifted Deposit
If you are renting and you want to buy the property you are living in, it may be possible to buy it from your landlord without saving for a deposit. A Landlord gifted deposit is where a buyer purchases the property at a discounted price and the discount can then be used as a deposit. If you are considering this option, speak to a specialist mortgage advisor about your options as it is not offered by all banks as standard.
Shared Ownership Mortgages
This scheme can help first-time buyers get on the property ladder or those on a lower income wanting to buy a larger property. Typically you will own between 25% and 75% of the property, and rent the remaining. You will likely require a far smaller deposit on these properties as you are only purchasing a percentage of the property, but there are 100% mortgages out there too.
Family Gifted Deposit
A family gifted deposit is a sum of money that is given by a family member to contribute to or pay the full deposit. This usually comes from parents or grandparents, as many first-time buyers turn to family for help getting on the property ladder. The buyers will need written confirmation from the family member to state that the money is gifted and the giftee is under no obligation to repay the money. Speak to a mortgage specialist if you are considering this route, as not all banks accept this as a form of a deposit.
Guarantor Mortgages
If your family is keen to help you get on to the property ladder, you can secure a loan against a family member's savings or property, this is called a guarantor mortgage. The lender may ask your guarantor to place savings into an account which they cannot access for a specific period of time. They will have their name as a guarantor on the mortgage, and will be eligible to cover payments if they are missed.
New-Build Developer Loans
Property developers will sometimes give you the opportunity to borrow money from them to use as a deposit on a property that they have built. This is then paid back within an agreed timescale, but be aware that this is on top of your mortgage payments so it needs to be affordable. If you are interested in buying a new build, then chat with property developers to see if this is an option.
What are the disadvantages of buying a home without a deposit?
Although saving for a deposit is hard, if you can try to gather a 5% deposit then it will give you more options and greater security when it comes to buying a property. Unless you are being given a deposit that does not have to be repaid, there will be extra costs on top of your mortgage that you have to consider.
Ready to buy?
Check out the homes that we have for sale
here, or why not speak to our friendly and experienced team on 028 9065 3333.
