Is a 1% Deposit Mortgage Worth It? | 99 LTV Mortgage

29-March-2024 12:46
in Mortgage
by Sam Hodgson
Is A 1% Deposit Mortgage Worth It? | 99 LTV Mortgage

A new low loan-to-value mortgage product could make mortgages more accessible for first-time buyers. 

Jeremy Hunt might have scrapped the 99% mortgage scheme, but that hasn’t stopped one lender from releasing their own 99% loan-to-value product. It could allow buyers to secure a mortgage with just a £5,000 deposit.  

Available exclusively to first-time buyers, it could solve the significant obstacle of saving for a deposit amongst the challenges of the cost-of-living crisis. The product is a five-year fix at 5.99%. It's available between 95.01% and 99% LTV with no initial fees, another factor making it more accessible by reducing the upfront costs.

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1% Deposit Mortgage - What Do I Need to Know?

The requirements:

  • You must be a first-time buyer 
  • It’s only available for houses (new builds excluded)  
  • Purchase prices between £100k - £500k 
  • The maximum age at the end of the term is 70 

What Do the Experts Say?  

Alex Chambers, Senior Private Client Adviser

How can a 99% LTV Mortgage Help First Time Buyers?

Times have been tough amid elevated inflation and the cost-of-living crisis. For many, the biggest barriers to securing a mortgage aren’t lack of affordability, but the challenge of putting money aside for a mortgage deposit while paying rent. 

The average deposit for a 3-bedroom house in the UK is £34,500. This typically works out as just under a 15% deposit for a £240,000 property. 

The average salary in the UK is £34,900 before tax, which generally equates to take-home pay of just under £2,300 a month. The average person on this wage could save £1,000 a month depending on living expenses. According to the UK house price index, the average house price in 2024 is £282,000. 

This means that it would take a sole buyer or a single-income household nearly three years of saving consistently to put down a 10% deposit on an average-priced property. The size of your deposit is one of the most crucial aspects of securing a mortgage. These calculations easily demonstrate the challenges that first-time buyers face when getting a mortgage, which this product could present a significant solution for. 

How to Apply for the 99% LTV Mortgage 

The lenders providing this new 99% LTV mortgage are intermediary-only, which means they only function through mortgage brokers. 

If you want to apply for this product, you’ll need to do it through a qualified broker. At Clifton Private Finance, we have an established relationship with this lender, and a history of helping first-time buyers get on the property ladder.  

Our team of experts can also recommend other products that may be even better suited to you. Working with a broker not only gives you access to exclusive products like this, but it also allows you access to market-leading rates and qualified financial advice. It can also increase your chances of being accepted for a mortgage.  

To see what we can do for you, call us at 0117 205 4836 or book a free consultation below. 

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