Anyone who’s ever bought a house will know the frustration that comes with saving for their deposit.
As you scour the property pages and pounce on every new ‘for sale’ sign that appears, you don’t want to wait any longer for your bank balance to grow.
That’s why a 5% deposit mortgage from The Cumberland could be the answer to your home-buying prayers.
Who is eligible for a 5% deposit mortgage?
The good news is that these deals are open to all - whether you’re a first time buyer trying to make that first step on to the property ladder, or an established homeowner who wants to buy something bigger or better.
We’ve been offering mortgages with just 5% deposits for many years so our teams know exactly how to help you decide if this is the loan for you. Along with other lenders, we paused them in 2020 while the property market was a little uncertain during the early stages of the pandemic, but now they’re available again.
What does this mean for home buyers?
The biggest benefit is obviously the fact you don’t need to save as much money up front. That’s particularly crucial for those trying to juggle paying rent with putting cash aside for the deposit.
But there are other pluses too. Signing up for one of these mortgages could let you take a bigger leap up the property ladder and buy a home with more bedrooms, in a nicer location, or with lots of outside space. Or it could allow you to make more of the equity in your existing property.
Jack Green, The Cumberland’s area manager for mortgages, says: “We know that it’s mainly first time buyers with a steady income who these 5% deposit mortgages will appeal to - it’s especially difficult for people in rented accommodation as that reduces their ability to save.
“In some cases, they’ll have help from family getting their deposit together. For example, if they’re buying a terraced house for £100,000, they’ll only need a £5,000 deposit. It’s easier to ask their parents to help with that than the tens of thousands of pounds they’d need with other mortgage deals.
“However, a 5% deposit mortgage can also be really useful for those who already have a property and some equity in it. They could use that equity as their deposit on a bigger place, or use part of it and keep some back for renovation work.”
What are the limitations of a 5% deposit mortgage?
Though the Chancellor Rishi Sunak announced a mortgage guarantee scheme for 95% mortgages in his March 2021 budget, it came with a lot of limitations.
Jack adds: “We share the Government’s ambition to help more people buy their first home - turning generation rent into generation buy, as the chancellor described it.
“But as we are not signing up to the Government’s mortgage guarantee scheme which means our customers are not restricted by its rules and we can be totally flexible about who we lend to.
“As with any mortgage, there are criteria we will follow. The same affordability checks will apply, and there will be a cap on the maximum term you have to pay the mortgage back, as well as a few restrictions on the type of property we will lend on, but otherwise it’s all very simple.
“We’re really excited about being able to make this mortgage offer again.”