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How to Buy a Home in Grimsby With a 5% Deposit | Mortgage Market Update 02/10/20

Mortgage Advice in Grimsby

In March 2020, COVID-19 brought the mortgage market down to its knees and to this day (October 2020) it is still struggling to get back onto its feet. Everything has been impacted in one way or another; in times like these, everyone has to try to stay optimistic and find ways to spread positivity. In this article, we will share some great news for the mortgage market… yes you can still obtain 95% mortgages.

Are you a First Time Buyer in Grimsby and have already been trying to shop around for 95% mortgages? Well if you are, you have probably realised that there aren’t many available… if any at all. Lenders just haven’t got their confidence back yet and as such, they are holding themselves around the 90% mark. However, there are still ways to obtain a mortgage with a 5% deposit and most applicants don’t know this. To see how it can be achieved, feel free to watch our YouTube video or continue reading on:

How to Buy a Home With a 5% Deposit | Shared Ownership & Help to Buy Equity Loan UK

Help to Buy Equity Loan

The Help to Buy Equity Loan was introduced by the government shortly after the credit crunch in 2013. Its aim was to give applicants the confidence that they needed to jump-start their mortgage journey. At the time, the Equity Loan scheme was just what the market needed, although, after time, it began to decrease in popularity due to the economy’s bounce back to normality. Skip forward to 2020 to the outbreak of COVID-19, lenders lost all confidence in the mortgage market once again. Luckily, only a few months later (as of October 2020), Help to Buy mortgages made their way back into the spotlight and now the Equity Loan is helping more applicants get onto the property ladder than it ever has before.

The Help to Buy Equity Loan allows you to put down 5% or more deposit on a new build property. No matter what percentage you put down, the government will loan you the remainder to make up a total of a 25% deposit. This means that you will have a total 75% mortgage and the Equity Loan to pay off. Here’s a great example of a home with a £200,000 price tag:

Help to Buy: Equity Loan scheme Example


A very important thing to know about the Help to Buy Equity Loan is that the loan that you get off the government (in the example above this is 20%), will need to paid off too. This Equity Loan will be interest-free for the first 5 years, however, if you don’t manage to pay it off within these 5 years, you will start receiving interest on the total due. This interest rate will start at 1.75%.

Now that you know what the scheme is and how it works, here is what you need to know in order to qualify:

  • You can only be buying a newly built property
  • The maximum purchase price is £600,000
  • This is the only property that you can own
  • You have to be buying the property for purely residential use only and not as a Buy to Let

Shared Ownership

If you don’t think that the Help to Buy Equity Loan is the right option for you, then the Shared Ownership scheme could be what you’re searching for. The Shared Ownership scheme was introduced back in the 70s to help people who were struggling to afford a mortgage get onto the property ladder.

This scheme lets you purchase a percentage of your mortgage and then pay the rest as rent. The percentage of the property that you hold a share in is typically between 25%-75%. Since you only own part of the property, you share the remainder of it with the government. The percentage of the property that you own can be increased at a later date. People usually make this decision once they have settled down or are perhaps making a little more money.

Just like the Help to Buy Equity Loan scheme, you have to qualify for the Shared Ownership scheme and meet certain requirements:

  • You can’t have a household income of more than £80,000 per year
  • Can only access if you can’t get a mortgage any other way
  • You need a good credit history
  • You can only own this property

You can find out more information on the official government’s website: https://www.gov.uk/affordable-home-ownership-schemes/shared-ownership-scheme.

Are they suited for you?

If you are finding it hard to obtain a mortgage and want an opportunity to get onto the property ladder, one of these schemes could be your ticket to begin your mortgage journey. If you want help in deciding which scheme could be best suited to you, you should approach a Mortgage Broker in Grimsby like us.

Both the Help to Buy Equity Loan and the Shared Ownership schemes are great ways to get the ball rolling with your mortgage process, especially in unprecedented times like these. Although, before you rush into anything, it’s always wise to weigh up your options first and see what will benefit you most.

Summary

To summarise whether or not it is still possible to get a 95% mortgage… yes it is, however, your options are limited.

To speak with a professional Mortgage Advisor in Grimsby and to get our expert opinion, get in touch with Grimsbymoneyman. We have been in the mortgage game for over 20 years now and have lots of experience with pointing customers in the right direction. Choosing the right option is much harder when you are doing everything on your own, which is why your Mortgage Broker in Grimsby is here to help from 8am-10pm, 7 days a week. We hope to hear from you soon!

Grimsbymoneyman.com & Grimsbymoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is authorised and regulated by the Financial Conduct Authority.
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