Deposit

To buy a property, you need to have some money to put towards the purchase yourself. Lenders will not let you buy a property without any deposit.

How much deposit will I need?

As a minimum, you’ll need 5% of the purchase price. The bigger the percentage deposit the better because this will often mean that lower interest rates are offered. It will also mean you borrow less so will have lower repayments and pay less interest back to the lender.

Where can the funds come from?

Your deposit can come from various sources, not just your own savings. A very common thing is for family members to give you some money as gift.

Are there any sources that I can’t use?

Whilst most lenders are happy for family to help with the deposit, some are strict on how close the family member is. So parents and grandparents can give you money, but a cousin may not be able to fit example.

You can’t take out a loan (for example from your bank) to fund the deposit. Most lenders insist that any family contribution is a gift (not a loan) and they will usually want a declaration to be signed by the donor to confirm the funds are a gift and not a loan.

Anything else?

There is a scheme whereby you don’t actually need any deposit and can take out what’s known as a 100% mortgage (because you’re borrowing 100% of the property’s value). However, to qualify you need to have been in rented accommodation and kept your rent payments up to date for a minimum of 12 months in the last 18-month period. There are other restrictions also, a key one being that your mortgage payments any be higher than your rent payments over the last 6 months. Do ask about this for more details of you feel you may be eligible.