How Much Deposit Do I Need For A Mortgage In Hull?
Mortgage Advice in Hull
How Much do I Need for a Deposit?
Before the events of the Credit Crunch in 2007, it was ridiculously easy to get a mortgage. Lenders were giving them out to applicants that couldn’t even afford them! The Credit Crunch forced Lenders to only offer 100% – 125% mortgages making it practically impossible to put down a deposit.
With given time, the market started to recover and lenders slowly gained their confidence back. In 2014, a new way of assessing affordability for a mortgage was introduced. This new approach allowed lenders to relax a little and resume back to offering 95% mortgages which were much more reasonable.
The property market is still recovering and it can still be hard to find the best deal out there that is best suited to your personal situation. This is where we come in! As your local Mortgage Broker in Hull, after your Free Mortgage Consultation, we know exactly how to find the perfect deal for you!
We are always asked lots of questions from people in different situations. The questions we get asked are most commonly from First-Time Buyers in Hull. We usually know exactly how to help them; here are the questions we get asked the most:
Shall I Put Down a Deposit Greater than 5%?
When putting down a deposit, it is normally always 5% of the property price. If you want to increase your chances of being accepted by the lender, putting down a deposit that is greater than 5% could be a good idea if you have the money. As you are overpaying the minimum required, you are showing the lender that you are not a risk to them. You are financially stable and should be able to keep on top of your monthly mortgage payments.
Can I take out a personal loan for the deposit?
Yes, you can, however, it may lower your chances of being accepted for a mortgage. Lenders see this loan as another credit commitment on top of your mortgage payments. They could also think that you can’t really afford to put down a deposit and that you are borrowing money that you could struggle to pay back in the given time. In summary, you are essentially borrowing 100% of the mortgage, from the lender and the bank. This is why it doesn’t look that good in a lenders’ eyes.
What about gifted deposits?
Gifted deposits are becoming more and more popular. A gifted deposit is where a family member or friend gifts you part of or all of the deposit. You need to know that this cannot be a loan! The lender will have to ensure that this is the case and ask the family member or friend where the money has come from and confirm that it is a gift. They will also ask them to provide ID and information about where the money has come from.
Gifted deposits are mostly gifted by parents to their children who are First-Time Buyers in Hull. It’s can be a struggle affording the deposit, so parents step in and offer a helping hand to get them on the property ladder. For more on gifted deposits in Hull, click here.
Evidencing the deposit
Before putting down a deposit, you will need to evidence exactly where you got the money from. Lenders will ask you for your bank statements to take a look at your monthly/yearly incomings and outgoings. They have to be sure that you will be able to afford the mortgage payments. A large savings account that you have had for a long time could really help you out. Lenders love to see that you can stick to long term financial commitments.
Be careful when you are depositing large sums of cash at once as you will need to prove where you have got this from to the lenders. You will need to evidence everything, especially if it’s cash-related. We recommend getting receipts for all of your purchases and making sure that they match the exact amount that went into your bank.
The hardest part of the mortgage process can sometimes be proving the source of the deposit (audit trail). If you are also selling your property, you will receive a Memorandum of Sale from the Estate Agent, you can use this as your proof.
Help to Buy Equity Loan and new build mortgages
There will always be a minimum of a 5% deposit on the Help to Buy Equity Loan scheme. You can only get access to this scheme if you are planning to put down a deposit on a newly built property. If you are unsure if you qualify, you should have a chat with your local Mortgage Advisor in Hull a Hullmoneyman.
On the Help to Buy Equity Loan Scheme, you can top up your deposit to 25%. This is because the government can give you an extra 20% loan to increase your chances of being accepted. You need to remember that this 20% is a loan and will need to be paid back with 5 years. If you go over the 5 years then you will start to receive interest on the payments. For more Help to Buy Mortgage Advice in Hull, check out our Help to Buy page here.