One of the biggest hurdles in purchasing a first home is generally saving for a large enough deposit. But there is potentially some great news with Accord Mortgages introducing what could be the answer.
Accord has launched an exclusive first-time buyer-only mortgage requiring a minimum deposit of £5000.
The mortgage criteria include a maximum loan to value of 99%, with a minimum loan of £95,001 and a maximum loan of £495,000. The mortgage can be taken out for a maximum term of 40 years and must not go past a mortgagee’s 70th birthday.
Mortgages must be on a capital repayment basis and the product is available for houses only and will not include flats or new build properties.
To qualify at least one mortgagee must be a first-time buyer i.e. never having owned a property in the past and all applicants must have an indefinite right to reside in the UK.
To make qualification more accessible gifted deposits will be accepted provided they are from an immediate family member.
New Deposit Scheme
The new £5000 deposit scheme will allow first-time buyers to borrow up to 99% of a property value. The scheme is available across England, Scotland, and Wales to purchase a property with just a 1% deposit, £5000 being the minimum, meaning a property of up to £500,000 can be bought using the scheme. The scheme is designed to help first-time buyers step onto the property ladder with a more affordable and easily saved deposit amount.
Accord research showed that around two in five first-time buyers receive financial help from friends and family to get onto the housing ladder. With gifted deposits from the immediate family being acceptable, will make homebuying hopefully a little easier.
Buying with a small deposit means that the loan-to-value ratio on the property is high and very little equity is in the property initially. Overpayments on this type of product would be highly recommended to increase equity and hopefully avoid any negative equity situations in the future.
The question often raised with high loan-to-value products; is how good my credit profile needs to be. Higher loan-to-value products carry greater risk for lenders and therefore generally require credit profiles to be in good order, the Accord product will need an enhanced credit score to be achieved compared to their standard products.
If you want to know more about the 5K deposit mortgage or other first-time buyer schemes available to assist with getting onto the housing ladder, such as guarantor mortgages, joint borrower sole proprietor, or shared ownership, let us know.
MMPE has helped many first-time buyers take their first step. Talk with us and let’s see if we can assist you with buying your first home.
