Looking for a mortgage with a lower deposit?

Why 90% mortgages can dry up quickly in uncertain markets, and what tends to still be available for first-time buyers with a 10% deposit.

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Over the last few weeks, we've seen the few remaining lenders offering 90% mortgages withdraw from the market.

Where have all the low-deposit mortgages gone?

Most lenders have pulled their 90% LTV deals temporarily because the number of applications for these deals has been so great that they simply can't cope with the demand.

With many lenders still operating at reduced staff capacity, the last thing they want is to be inundated with applications they can't process in a timely manner, which is no good for anyone.

On top of that, in an uncertain economic climate many lenders become more cautious and pull 90% LTV deals until there's more certainty.

The good news is that some 90% LTV deals are still available, albeit from a limited number of lenders. There are conditions attached, some lenders only offer them to first-time buyers, and others restrict the income multiples available.

You'll need to be quick, too. We've seen allocations of funds run out within a few hours of being released, with brokers having to retry on a daily basis to get a mortgage agreed.

Hopefully, as the days and weeks go on, we'll see more mainstream lenders coming back into the 90% market.

Frequently asked questions

What's the smallest deposit I can buy with?

Many lenders offer mortgages at 95% loan-to-value, meaning a 5% deposit, and a few schemes allow even less. A larger deposit generally opens up better rates, but low-deposit options are widely available.

Are low-deposit mortgage rates higher?

Usually a little, yes. The higher your loan-to-value, the higher the rate tends to be, because the lender is taking on more risk. Even a small increase in your deposit, say from 5% to 10%, can noticeably improve the rate on offer.

Can I use a gifted deposit?

Yes. Most lenders accept a gifted deposit from a close family member, provided it's a genuine gift with no expectation of repayment. The person gifting will usually need to sign a short letter confirming that.

What is the 95% mortgage guarantee scheme?

It's a government-backed arrangement that encourages lenders to offer 95% mortgages by guaranteeing part of the loan. It doesn't change how you apply, you simply access a 5%-deposit product in the normal way.

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