How Much Deposit Do I Need for a Mortgage in Derby?

Mortgage Advice in Derby

In most cases, the minimum amount that you’ll need for a mortgage deposit is 5%. Despite this, the amount can change depending on your credit history, type of house, where you live, etc.

As well as this, this also depends on what you are wanting to do. Some customers are looking to into the property or they are renting it out as a buy to let. We do find that many are interested in a government scheme like a type of Help to Buy.

Keep in mind that everyone’s mortgage situation is different. Therefore, your total deposit can vary based on your circumstance.

Why do I need a deposit anyway?

Taking it back to the mid-2000s when lenders were giving out mortgages to applicants who couldn’t really afford one, before the credit crunch. At that time, some applicants didn’t have the money there for a deposit! This resulted to the mortgage market crashing in 2008. This became a 5-year long recovery to get mortgage market back to a stable condition.

Since then, lenders will now ask for some form of a deposit. This can show to a lender that you’re in a serious financial position to proceed and you have the ability to keep up to date with your mortgage payments. This one of the reasons why an individual with bad credit could find getting a mortgage a challenge.

If you have good credit and a green credit score, there is a high chance that you’ll be able to access a 95% mortgage. On the flip side, having bad credit could mean you need to provide a 10%-15% minimum deposit.

Will the government pay the deposit for me?

No, the government will never pay for your mortgage deposit but, they do offer mortgage schemes.

Some of the schemes that are included are Lifetime ISA, Shared Ownership and the mortgage guarantee scheme. If you are looking for further information regarding the government-led schemes available to you in Derby, check out ownyourhome.gov.uk.

I have 5% deposit – is that enough?

As discussed, 5% deposit is usually possible with a clean credit history.

This can vary depending on a range of factors like your credit history, your lender and the state of the economy. The majority high street lenders will ask for a 5% deposit, normally, these lenders will generally offer the best rates of interest too.

It’s important that you can show to a lender that you can afford a mortgage, having only an AIP is not enough. Regardless of whether you’ve saved up around 5%, will you be able to afford a mortgage out on that property? Are you able to maintain the payments over the full mortgage term?

My Credit History is Poor – How Much I Need to Put Down?

In the unfortunate case that you have a bad credit history, you often find that you have to put down a higher deposit. As a mortgage broker in Derby, we have found that lenders ask between 10%-15%.

In some cases, customers in this situation have taken out a specialist product. In this case, we would suggest that you get specialist mortgage advice in Derby.

We have a team of expert mortgage advisors in Derby that will work hard in finding you the best rate available to you that is fitting for your personal and financial state.

What about Buy to Let?

When it comes to a Buy to Let, you will need to put down a higher deposit. Commonly, lenders will be asking between 20%-40% for a deposit. Through our experience as a mortgage broker in Derby, we have found high street lenders asking for a 25% minimum.

For those who are existing landlords and have a large buy to let portfolio behind them, lenders may be more favourable to lend to you.

Can I Take out a Loan for the Deposit?

On the off chance that you are able to pursue with a loan as your deposit, you need to keep in mind that you are being given 100% of your mortgage, which will result in an increase in your payments. Therefore, you need to compensate for both sets of payments which can be a downside in the lender’s eyes.

For more information regarding this situation, we do strongly recommend that you get in touch with a mortgage specialist in Derby like ourselves. Our friendly team are here 7 days a week to answer any of your questions, contact us today!

Can someone gift me a deposit?

We do find that First Time Buyers in Derby are strongly encouraged by lenders to utilise the option of a gifted deposit. It can be a fantastic way for people to get onto the property ladder for the first time.

We find that gifted deposits is from family members or friends. If you receive a gifted deposit, it’s important that it is evidenced correctly and highlights where the deposit has come from.

Are there any circumstances at all where I don’t need a deposit?

There can be rare cases of an individual not needing a deposit. One of these is if you are a sitting tenant at a discount from the open market value. Another would be if you were buying from a family member.

On the off chance that you can get a mortgage without a deposit, you may need to seek help from a professional to help with evidencing your income, affordability, credit score, etc.

Please note that the above information is for reference purposes only and is not to be viewed as personal financial or mortgage advice.

Mortgage Advice in Derby

Last Edited: 14/11/2022