For most mortgages you’ll need a deposit of at least 10% (and usually higher). For a £300,000 house, that’s at least £30,000. When you factor in fees, stamp duty and moving costs, you’ll need a significant amount of cash on hand to make the purchase.
However, if you don’t yet have large savings, you may still be able to get a mortgage. Depending on your situation, a government scheme may be able to help.
Help to Buy: Equity Loan
This government scheme reduces the size of the deposit you need to purchase a property. With a Help to Buy: Equity Loan the Government will lend you up to 20% of the cost of your newly built home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest.
To be eligible you must:
Starter Home Initiative
If you’re under the age of 40 and a first time buyer with a household income of less than £80,000 (or £90,000 in London), you’ll be eligible for the Starter Home Initiative. This scheme gives a discount of at least 20% on the purchase of your property.
The Starter Homes Initiative has not yet started, but you can register your interest and check for updates on the scheme here.
Struggling to pay your monthly mortgage payments?
If you’re struggling financially and are unable to make your mortgage payments, be proactive and communicate with your lender. Consistent late payments will negatively affect your credit score, but your lender should be able to offer you some refinancing options.
A riskier approach would be to investigate an interest-only mortgage plan. This will significantly reduce your monthly payments, but you’ll have to pay the original amount borrowed in full at the end of the mortgage term. Only look into switching to an interest-only mortgage if you’re confident that you’ll be able to save enough to make up the final lump sum. You’ll have to provide a convincing investment plan to a lender on application too.