Still Renting? You Could Be Closer to Owning Your First Home Than You Think
If you're currently renting but would love to own your first home, the deposit might feel like the biggest thing standing in your way. Many renters assume they'll need a 10% deposit before buying becomes realistic. But you might not need as much as you think.
There are now mortgage products designed specifically for first time buyers that offer up to 98% loan to value (LTV). In simple terms, that could mean buying your first home with a deposit of around 2%, subject to eligibility and lending criteria.
For some renters, that could make owning a home much closer than they realised.
What Does 98% LTV Actually Mean?
Mortgage terminology can sound complicated, but this one is fairly simple. A 98% LTV mortgage means the lender could provide up to 98% of the property's value, with you providing the remaining amount as your deposit. Compared with the traditional 10% deposit many first time buyers believe they need, that's a significant difference. It could mean spending less time saving and being in a position to start your first home search sooner.
Your Income Matters Too
Your deposit is only one part of the equation.
A lender will also look at your income, financial commitments, credit history and overall affordability when deciding how much you could borrow. Some first time buyer mortgages can potentially offer borrowing of up to five times household income, subject to affordability and individual circumstances.
If you're buying with somebody else, both incomes may be taken into account. The important thing is not to assume what you can or can't afford without finding out.
Can Family Help With Your Deposit?
Yes, with some mortgage products.
Certain low deposit mortgages accept gifted deposits, meaning family could potentially help you towards the amount you need. Every lender has different criteria, but if family are willing to help, it's worth exploring your options with a mortgage adviser.
Could You Be Closer Than You Think?
If you're already comfortably paying rent every month, you may have wondered whether you could be putting that money towards a home of your own instead.
Of course, owning a property comes with different costs and responsibilities, and a low deposit mortgage won't be right for everybody. But the mortgage market has changed, and there are more options available to first time buyers than many renters realise. The biggest mistake could be assuming you can't buy without actually checking.
Find Out Where You Stand
You don't need to find a property before speaking to a mortgage adviser.
In fact, finding out what you could potentially afford first can make the whole process much easier. You'll get a clearer idea of how much you could borrow, the deposit you might need and what your monthly repayments could look like. You might discover you still have some saving to do. Or you might find that you're already much closer to buying than you thought.
Could It Be Time to Swap Renting for Owning?
If you're currently renting and would love a place of your own, don't automatically assume you need a 10% deposit before you can start looking.
With mortgages offering up to 98% LTV and other products specifically designed for first time buyers, it's worth finding out what's possible.
At Pendle Hill Properties, we help first time buyers through the whole process, from starting their property search to finally picking up the keys.
Your first home might be closer than you think.
