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Published on : November 8, 2018 16:46

Handing over keys


Beat the Brexit Wave | Part 3: No Deposit? No Problem!


We’re just over half way through our five-part series on how to beat the Brexit wave. Thanks for taking the time to tune back in and well done for making it this far!

Yesterday we briefly talked about the fact you don’t actually need a deposit to buy a house. If you hadn’t already guessed from the title, that’s going to be the topic of today’s blog.

If you’re currently saving for a deposit, you probably appreciate how tough that task actually is. Setting aside enough cash to get onto the housing ladder can seem like an uphill struggle, especially when you’re trying to spend less than you earn.

However, a lot of people don’t realise that you don’t need to spend years saving for a deposit. There are a variety of ways you can buy a home without any deposit at all.

Today we’re going to outline a few options that might provide the leg-up you’ve been looking for. There’s no need to subject yourself to a frugal life of beans on toast for the foreseeable future. You just need to read the points below to find a simple solution to getting on the property ladder.


100% Mortgages


Calculator


Yes, 100% mortgages really do exist. They’re not some mythical thing that only exists in home buying fairy tales – a handful of lenders do offer 100% loan-to-value mortgages. In a nutshell, this means you can buy without putting a penny down and borrow the full value of the property.

Although they do exist, they are fairly rare as they’ve only recently been reintroduced to the market. They disappeared during the credit crunch of 2008 – but now they’re back on our shelves.

At present these deals typically require mum or dad to allow the bank to secure 10% of the purchase price on their own home which is then removed after two years.


Gifted deposit


gifted-mortgage-deposit


A gifted deposit is pretty self-explanatory. It’s when some or all of the money you put up for a deposit is given to you as a gift by a friend or family member.

It’s important you have the right evidence and legal documents to prove the gift is indeed a gift and that the family member or friend does not expect to be paid back.


Family deposit mortgages


Mortgage


Did you know the bank of Mum and Dad is one of Britain’s biggest lenders? According to statistics provided by Moneywise, more than a quarter (27%) of home buyers have received help from the ‘Bank of Mum and Dad’ so far this year.

Although most parents don’t have a huge pile of cash they’re able to part with, family deposit mortgages can be quite flexible. It’s a great way to help you get onto the housing ladder without draining their savings.

These mortgages can work a few different ways, depending on which lender you go to. Sometimes it involves a parent tapping into the equity in their home to fund a deposit. This usually means arranging a new mortgage deal, with the rise in their repayments, or the term increased.


Model house with couple in background


Alternatively, parents may also be able to slot their savings into an account linked to your mortgage. This acts as security against the loan, without the helper giving up their savings – or you having to build a deposit. Once a set time period has gone by, typically three years, they get their cash back, often with interest.

As you can see, there are loads of way to fund your dream home without a deposit. Hopefully, this has given you the confidence and information you need to take the first step towards buying your first home.


Want to talk to one of our mortgage advisors about how we can get you on the housing market?

Click here to book your free, friendly consultation.


mortgage-consultation


If you’re still on the fence about taking the first step on the housing ladder, we’re here to help. This is the third article in a five-part series that is going to help you better understand the current housing market and why it’s so important you miss the Brexit wave.

Tune in on Monday for part 4!


Your home may be repossessed if you do not keep up repayments on your mortgage.

A fee of a maximum of £500 or up to 1% of the mortgage amount, if greater, may be charged depending on your circumstances. A typical fee is £399.

Openwork Limited offers insurance and investment advice on products from a limited number of product providers and advice on mortgages representative of the whole market.