In short you can get a Mortgage with as little as a 5% deposit. Assuming the purchase price is £100,000 that would mean you need a £5,000 deposit plus costs.
There is however a longer answer which may mean you can get away with a smaller deposit.
Help to Buy ISA
A Help to Buy ISA is a great scheme for people not looking to purchase anywhere in a rush. You can put some/all of your savings into a HTB ISA and when you come to withdraw the money, the government will top it up by 25%.
You can put in up to £12,000 which can be made up from a maximum deposit of £1,200 in the first month and £200 a month thereafter. There are various rules around this small deposit mortgage scheme so it is important to look into rules and your financial circumstances before opening one, but the 2 main points are that the purchase price must be no more than £250,000 if outside London or £450,000 in London and you must be a first time buyer (ie NEVER owned a property).
If you are purchasing a home jointly and you are both first time buyers, you are able to open one HTB ISA each, meaning you can double up on your bonus.
Going off the example above, a £100,000 purchase price would still mean a £5,000 deposit but you would be eligible for a bonus of up to £1,250 which can go towards paying your solicitors fees and so on.
These can work in various ways nowadays. You may have a Mortgage lender who takes a charge over a relatives property as well as your new home.
Another form of Guarantor Mortgage is where a parent or sibling is asked to put money in a savings account for 2-5 years. Those funds would be called upon if you were to not make your Mortgage payments.
There are various other types of guarantor mortgages available, but not one where you would be able to reduce your deposit.
What to do next?
Live the student life – Beans and pasta 🙂
If you have a small deposit or are still in the process of saving, call us. We may be able to help with some pointers from other people we have spoken to before in a similar situation to yourself.
it is always important to note that the mortgage market changes regularly so what advice and options available for a small deposit mortgage that apply today may not be the case tomorrow so it is always best practice to speak to a whole of market broker such as ourselves, for the latest information.