Our team has extensive experience in the mortgage industry and we also understand the challenges that can come with getting a mortgage. Before the credit crunch, it used to be easier to get a mortgage with lenders handing out mortgage here and there. The aftermath of the credit crunch resulted in lenders being stricter and offering 100% and even 125% mortgages. Getting a mortgage in 2007 was pretty much impossible but it slowly returned to a better state with the market easing out and changing back to a relaxed state. Lenders turned back to 95% mortgages.
For those who have a family or are living in rented accommodation, it can be a challenge to find their perfect first home. As a mortgage broker in Durham, we do find we get lots of questions about deposits and the amount you will need.
Putting down a deposit that is more than 5% can significantly increase your chance of getting accepted for a mortgage. Having a larger deposit could also lower the of interest that your lender offers you. A deposit shows a lender that you are financially stable and shows that you are trustworthy and shows that you are not a risk. Lender off their products in bands of 5% e.g, 95% mortgages are the most costly, followed on by 90%, 85% etc.
It is possible to do this, however, we don’t recommend it as lenders usually dislike this. From their point of view, they think you can’t afford the full 5% deposit and are in need of financial support. Furthermore, they will categorize this new loan as one of your recurring monthly credit commitments. This will result in you getting a smaller mortgage than you would’ve without the personal, however, you will be borrowing two lots of money equating to the full 100% of the mortgage. These are the reasons why lenders can be put off from this option.
A majority of lenders will accept gifted deposits for a mortgage. If anything, it’s unusual to find a lender that doesn’t accept these. Regarding the gifted deposit is not a loan, then the lender should accept it.
First time buyers in Durham generally get on the property ladder this way and typically receive a gifted deposit from a parent or a friend. This is because they usually understand how difficult it can be to meet that 5% so provide this deposit to help them get on the property ladder.
Part of the application process will involve you showing the lender where your deposit came from and evidence of your monthly/yearly income and outgoings. Lenders need to make sure that you will be able to pay off your mortgage after putting down your deposit. The more deposit you have saved, the more this will help your application. Saving money shows the lender that you are good at managing your money.
In the circumstance where you have put a large amount of cash into your account, you will need to show to the lender who you got this. For instance, if you are selling a car, you will need to show them a receipt, to evidence how much you sold it for and show that this price matches your deposit into your bank.
When it comes to depositing large sums of cash at once, you have to be wary as it could look suspicious on lender’s part. The longer that these sums have been in your account, the simpler the whole process.
The most difficult part of the application can be proving the source of your deposits as sometimes they can be hard to get a hold of.
In terms of selling a property, then your Estate Agent will give you a Memorandum of Sale to use as proof.
Here at Durhammoneyman, we have helped thousands of customers achieve their mortgage goals by utilising our extensive experience and knowledge of the mortgage industry. Whether you are looking to move home or are a first time buyer in Durham wondering where to start in getting a mortgage in Durham, please get in touch and book yourself in for a free mortgage appointment with one of our experts.
Date Last Edited: December 6, 2023