Lenders consider lower deposits from borrowers

A number of recent reports have suggested that some lenders in the UK are now considering lower deposits from first time buyers. This comes after a particularly difficult couple of years where many first time buyers and low income families have been unable to get a mortgage because of the extortionate deposits that lenders have been demanding from customers.

In the past consumers were able to get mortgages for up to 100 percent of the property value, and in some cases up to 125 percent of the property value, but since the global credit crunch all of these mega mortgages have disappeared.

The traditional mortgage amount for many years was 95 percent of the mortgage value, which was for most people affordable, as it only meant finding 5 percent of the property value. However, the higher deposit levels that have come into force over the past couple of years have meant that many people have been unable to raise the deposits required for their mortgages.

However, the low interest rates that are still in force coupled with the ongoing stamp duty holiday has resulted in increased interest from first time buyers, and this has prompted some lenders to reduce their deposit requirements, which will come as good news for many consumers.

Whilst lenders have been demanding deposits of up to 40 percent in order for consumers to access affordable deals it is thought that a number of lenders are now accepting just 10 percent for a more competitive rate of interest on a mortgage, which whilst not as low as the 5 percent deposit before the credit crunch is still a big improvement on recent demands.

One borrower, Hannah Geach, stated: “I didn’t think that I would ever get onto the property ladder with the high deposits that lenders were asking for. However, over the past few weeks I have found a few deals with lenders where I only need a 10 percent deposits, which is encouraging news.”