Where to find a 95% mortgage – by Mark Dyason
The market has changed dramatically in the past decade and buyers with a small deposit can find it difficult to get the right loan, but can still find a 95% mortgage, if you know where to look.
Many big banks are looking for customers with large deposits and perfect credit histories so wandering into your local branch might not yield the result you want. But don’t give up hope, there are many options available.
Do I need a perfect credit score?
A common misconception is that you need to have had pristine finances for a number of years if you’re to get a mortgage with a small deposit – but that’s not the case.
The majority of people have good credit scores. But even if you’ve had a financial blip in the past – such as a missed payment – there are still options for getting a 95% mortgage. These are usually from smaller lenders and building societies – which you might not find when you walk down the high street.
These lenders are ready and willing to help borrowers who have had some issues with credit in the past. A quick call to Edinburgh Mortgage Advice will help match you with the right 95% mortgage deal.
Can I use my parents as a guarantor?
Some call it the ‘Bank of Mum and Dad’ as getting parental assistance is becoming common in today’s mortgage market.
A range of lenders will allow parents to act as a guarantor on your mortgage, or to offset your loan with their savings. For example, one lender offers 100% mortgages when parents place some of their savings into an offset account.
Your parents’ savings earn interest for three years and after this time they can move their cash elsewhere. By that point you’ll be able to stand on your own two feet and access cheaper mortgage rates, without parental support.
Are there other schemes available?
Many people are using shared equity schemes to purchase their first home. Shared equity allows you to move into your own house, without having to fund all of it. In some cases a bank will lend up to 100% on your share of the property, meaning you do not need a deposit at all.
In Scotland the Low-cost Initiative for First Time Buyers (LIFT) is a scheme which can help you get onto the property ladder. You pay for a share in the property while the Scottish government pays for the remainder. This can really help those with smaller deposits own a home with a small deposit.
Other government schemes are available in both England and Scotland, but again these may not be widely publicised at major lenders.
So stop pounding the high street and give Edinburgh Mortgage Advice a call on 0131 339 2281.