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Author: Elliott Culley - Director & Mortgage Adviser of Switch Mortgage Finance
0% Deposit Mortgage
With rent, bills and everything else to pay for, saving for a house deposit is the biggest challenge for first time buyers. The average age for first time buyers is now over 31 years old and when you compare this to only a decade ago, there is evidence to suggest the time it takes to build a deposit has risen by 3 years.
With house prices increasing far more rapidly than wages, you might have started to think that owning your own home would never happen. However 0% deposit mortgages have now returned to the market and could be a possibility for you, to step onto the ladder much more quickly.
Can You Buy a House With 0% Deposit Mortgage UK?
Yes this is currently possible with one mortgage lender. The lender will base the amount you can lend in two ways. Firstly your income and expenditure will need to be assessed and secondly an assessment on your current rental payments.
Am I Eligible for a 0% Deposit Mortgage?
Currently as there is only one lender in the market you need to fit the criteria of said lender. You need to be a first time buyer, over the age of 21 and you must have been paying rent and bills for 12 of the last 18 months.Which Mortgage Lenders Currently Offer 0% Deposit Mortgages?
Currently Skipton Building Society offer a 0% deposit mortgage called a Track Record Mortgage. It is likely more lenders will offer this type of product in the future.How Much Can I Borrow on a 0% Mortgage?
The maximum you can currently borrow is £600,000.00. The lender will do an assessment of your income and expenditure to work out how much they can lend. They will also ask for your current rental payment over the last 6 months. The new monthly mortgage payment cannot be a single penny over the current monthly rent you pay. For example if you paid £1000p/m on rent. The maximum loan you could obtain over a 35 year term would be £186,442 based on the current interest.Speak to an Expert!
Contact us today for expert advice and guidance on your unique mortgage and property needs. We will work with you on a one-on-one to basis to help you find the right solution for your needs.
With our experience you can rest assured that you are in good hands when it comes to securing the financing you need for your property.
Are There Restrictions?
Yes you currently need to have been renting for 12 of the last 18 months and be able to proof these payments.
The current product is only available on a 5 year fixed rate.
You also cannot currently use this product to purchase a new build flat, although flats older than 3 years and new build houses are allowed.
You cannot have any missed payments on debts / credit commitments (e.g. mobile phone bill) in the last 6 months
What Are The Risks of a 0% Deposit Mortgage?
The main risk with 0% deppsit mortgages is if house prices were to drop. If you wanted to sell the property you could end up in negative equity, which would mean you either couldn’t sell the property or have to find money from elsewhere to make up the shortfall to the lender.
This is part of the reason why new build flats are not allowed as a property to use with this type of mortgage.
There are lots of different schemes currently available first time buyers and you may find a different options suits your personal circumstances better. You need to ensure you are comfortable with this risk this type of mortgage entails and this is where a mortgage broker can assist and advise you.
Can I Get a 0% Deposit Mortgage With Bad Credit?
Currently there are restrictions on bad credit for this type of mortgage. An applicant cannot have any missed payments on debts / credit commitments (e.g. mobile phone bill) in the last 6 months.Why Choose Switch?
Becoming a first time homeowner is an exciting journey, and with the right guidance and support, the process of getting a first time buyer mortgage can be straightforward. If you have any questions or need further assistance, don’t hesitate to contact us for expert advice.Why Switch Mortgage Finance
- Raising The standards of financial advice
- Making financial advice accessible to all
- Trusted & stress-free financial advice
- Friendly, personable advisors