The aftermath of the credit crunch has made lenders comfortable again, offering up to 95% mortgages to first time buyers in Manchester.

It’s only fair for lenders to see evidence that you can save on a monthly basis, not only does it build confidence, but it also assures lenders that you can afford your monthly repayments, even in challenging times.

We understand the difficulty of saving for a 5% deposit for many first time buyers in Manchester, often serving as a significant hurdle for those aiming to enter the property market. This challenge becomes especially pronounced for individuals with families or those currently residing in rented accommodation.

Is it better to invest more than a 5% deposit for a mortgage?

If you can afford to, you should aim for a higher deposit. A larger deposit works to your advantage, enabling you to secure a lower interest rate, saving you money in the long term. It also portrays you as a less risky borrower to lenders. The required deposit will vary, determined by several factors, including your financial status.

The proportion of mortgage you borrow will inform lenders about your commitment to your mortgage. However, bear in mind, greater interest rates equate to higher repayments costs. Therefore, a larger deposit not only helps in making your home buying process smooth but also assures your long-term satisfaction.

Can I take out a personal loan for the deposit?

This option could work under certain circumstances. The lender will consider your monthly payments from your loan as an extra financial commitment, which could potentially reduce your approved mortgage amount. This essentially means you’d be borrowing the full purchase price, something most lenders are unwilling to support.

Do Lenders accept gifted deposits for a Mortgage?

Lenders usually accept deposits in the form of gifts from family and friends. The benefactor, however, must vouch that the money gifted is not a loan and provide identification and proof of funds to fulfil anti-money laundering obligations. Some people receive generous gifts from the “Bank of Mum and Dad” to help towards a deposit.

Evidencing the Deposit

Lenders need to see bank statements for Anti-Money Laundering reasons, showing how the deposit fund was accumulated. If you have made a large deposit, you may need to provide extra evidence supporting this. For instance, if you have sold a car, you would need a receipt reflecting the amount it was sold for corresponding to your bank deposit. Sellers could use the Memorandum of Sale drawn up by the Estate Agent as proof.

Buying as a Sitting Tenant/Buying from a Family Member

If you’re buying at a discount (If you’re being offered a £100,000 house for say £90,000), some lenders might consider this as your guaranteed deposit. Your eligibility for a right to buy in Manchester from a Local Authority or any other Social Landlord could help in such cases—our mortgage advisors in Middlesbrough are readily available to help you with this.

Date Last Edited: February 15, 2024