The happy days of 100% and even 125% mortgages seem a long time ago. Now the credit crunch is behind us, and lenders tend to be more confident again to offer 95% mortgages to first time buyers in Middlesbrough.

It’s reasonable that you should show you can save each month. It also gives lenders comfort that you have something to invest in the process showing you have something to lose should it start to become more challenging to keep up your mortgage repayments.

We know it’s challenging to save up a deposit for many people, and this is their primary barrier to entry into the property market. It is daunting if you have a family or are in rented accommodation.

Is it better to invest more than a 5% deposit for a mortgage?

The higher the deposit the lower interest rate you will receive and this usually is more cost-effective and helps you in the long-term. The reasons for this is that you appear more reliable to them. Bands differ in price depending on various factors such as your deposit.

The percentage of your mortgage provides lenders with an idea of how invested you are to your mortgage, although considering – the higher the interest rate, the more expensive. This means that the higher your deposit, the more secure you will be when it comes to purchasing your dream home meaning you will be happier in the long term.

Can I take out a personal loan for the deposit?

In a limited number of circumstances, it can be successfully achieved. The Lender will make the monthly payment as an additional credit commitment, therefore, grant you a smaller mortgage.

As a result, one will qualify if you hadn’t borrowed the deposit. Most lenders oppose this as you are essentially borrowing 100% of the purchase price.

Do Lenders accept gifted deposits for a Mortgage?

Yes, most accept gifted deposits from family members and friends can be acceptable too. The sender of the gift will need to confirm it’s a gift, rather than a loan, and need to produce ID and proof of funds for anti-money laundering purposes.

Others have turned to the Bank of Mum and Dad, gifting their children funds towards a deposit.

Evidencing the Deposit

For Anti-Money Laundering purposes, providing bank statements help to evidence funds. Lenders like to see how the money is being built up as this provides more of genuine insight.

If you have deposited a large amount into your account, you may need evidence to support this.

For example, if you have sold a car, then you’ll need a receipt and the amount you have sold the asset for would match the amount paid into your bank account. This will highlight reliable sources backing up your finances.

  • Large cash deposits can be a considerable obstacle.
  • The longer funds have been in your account, the easier this all gets.
  • Proving the source of the deposit (audit trail) can be the trickiest part of the application sometimes.

If you are selling a property, then the Memorandum of Sale provided by the Estate Agent is your proof.

Buying as a Sitting Tenant / Buying from a Family Member

Usually. If it is a genuine discounted purchase, i.e. the house is worth £100,000, and you have been offered it, for example £90,000, then some Lenders will accept this as your guaranteed deposit.

This works well if you are eligible for a Right to Buy from the Local Authority or other Social Landlord, our mortgage advisors in Middlesbrough can help you find the most suitable right to buy mortgage in Middlesbrough.

Date Last Edited: February 1, 2024