Mortgage Deposits Explained – Arm Yourself With The Facts


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Buying your own home today isn’t the cakewalk it was only ten years ago. Before the financial crash, lenders were desperate to throw money at you without doing an in-depth survey of your financial strength. Irresponsible lending in all forms is what lead to a recession in the first place, and it is a sad reflection on our government that the poorest are being forced to pick up the pieces.

Financial institutions were looking for a way they could start handing out mortgages again because it is that is how they make their money. They now have to demand higher deposits and do more stringent checks before people can qualify for a mortgage.

This article is dedicated to understanding the deposit needed, and a few ideas for gathering it. You need to be good at both saving and raising money if you are to buy your home these days.

The Deposit

Banks and building societies require a twenty percent deposit nowadays. If you are lucky, you may find a lender willing to offer you a ninety-five percent mortgage, but that is unlikely. So, twenty percent of a property valued at one hundred and fifty thousand pounds is a whopping thirty thousand. That is a staggering sum for most people and the banks found that the market was stalling because people just couldn’t raise that amount of cash. Even if you find your dream home in an estate agents in Bromley, there is a lot to do before you can buy it. The government introduced a system to help people manage a deposit, but you will have to act quickly if you want to take advantage of it. It has been that successful that house prices have risen fast, and it may be withdrawn to calm the market down.

Help To Buy

In 2009, the help to buy scheme came in and proved to be a success. Under the scheme, the borrower only needs to find five percent of the deposit they need and the country will pay the other fifteen percent. The borrower does not need to start repayments on the help to buy money for five years, when they should be able to afford the repayments. Critics argue that wealthy people abused the scheme to buy second homes, and I have no doubt that is the case, but it has also helped many struggling families onto the housing ladder.

Raising The Deposit

People are working hard to get the money they need. It is a slow process but after a couple of years you can save up a significant amount of money. Here is a couple of ideas you may like to implement yourself.

  • Start your own online business. Dropshipping is a smart way to make money. You sell products but have no physical contact with them. Sign up with a supplier to begin with and agree terms. Then you sell their products on your website and take a commission from each sale. The supplier ships the product to the customer. Some entrepreneurs make much money selling items from many suppliers.
  • Take on another job. Keep in mind that it is only temporary. You could stack supermarket shelves for a few hours in the evenings, or take on some freelance writing if you are very talented.

The lender will do background checks on you and see what you owe to other people. If your parents are giving you the deposit money, make sure they tell the bank it is a gift, or it will count as another debt.

Getting a mortgage is hard but not impossible; I wish you all the luck in the world.

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