A short answer to the question of whether or not you need a deposit to buy a home is yes!
Unless you have the cash to buy a property outright, you’ll need a mortgage and the days of 100 per cent mortgages are long gone.
It used to be the case that five per cent deposit mortgages were on offer, but again these are very rare now.
Banks and other lenders have to be so careful these days about who they lend to, and they have to ensure that repayments can be made.
When you buy a home in Huddersfield, you will need a deposit. For most people, it is a case of considering how much that deposit will need to be and how can they save the funds to cover it.
But there are ways of buying a house with a low deposit.
Here, we at Huddersfield Sales & Lettings take a look at the deposit situation, and how you might be able to buy a property with only a small deposit.
Helping You To Buy
The Help To Buy scheme was launched by the Government to help people get on to the property ladder. In effect, it is a loan scheme available to first-time buyers and homeowners.
You can use Help To Buy to borrow up to 20 per cent of the price of a new-build home (up to 40 per cent in London). You then only need a five per cent deposit, making home ownership much more achievable.
The Government has announced that the existing scheme is to end in March 2021, with a similar scheme open to first-time buyers only. This could be a way for you to get on to the property ladder without having to save a considerable deposit.
Top Tip: As the current scheme is ending, it might be best to get moving now if you are looking at using Help To Buy as there’s no guarantee you will qualify under the new rules.
Low-deposit mortgages are not quite yet a thing of the past, but not far off! They were to be found aplenty quite a few years ago, but since financial crashes, notably around 2007 and 2008, and the fallout that mainly focused on banks, lending organisations now take a dim view of low-deposit mortgages.
Chances are, you can find 90 per cent mortgages, and 95 per cent mortgages are still available, but they are rare. While they may seem like a good option, house prices are on the up meaning that a five per cent or 10 per cent mortgage still means finding a deposit of several thousands of pounds.
Another aspect to think about though is that while a low-deposit mortgage may seem achievable, costs and charges are likely to be much higher. Lending organisations are taking a more significant risk and therefore have a need to increase charges.
Top Tip: It may seem like your only option, but please make sure you know exactly what you are getting into.
Building a Customer’s Future
Up and down the country, new homes builders are developing sites as we speak. Some might be bringing new sites to the starting line, others might be getting back to work on sites that had a pause because of COVID-19 restrictions.
This country needs new homes, and there is definitely a market out there. But that also means there is enormous competition between builders.
To attract buyers and stand out in the crowded market, new homes builders often offer deals, and this is where you could be on to something good.
It’s not uncommon for builders to market their sites with offers that include carpets and white goods, and some will even pay the deposit or at least loan the deposits on a new home.
Top Tip: It’s good to keep in touch with your local estate agent, keep an eye on social media and in the property pages of your local paper for news of new sites from housebuilders. If they are struggling to shift homes, wait until year-end when they are more likely to do a deal.