Low-deposit mortgages on the rise for first-time buyers

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Spring will soon be here, and is the peak time for first-time buyers looking for a home. November 2016 research by the website Money Facts has revealed that there has been a significant increase in low-deposit mortgages for first-time home buyers.

The government’s Help to Buy scheme was intended to help first-time buyers by guaranteeing mortgages that could be secured with a deposit of 10% or less. Previously lenders viewed low-deposit mortgages for first-time buyers as risky. The scheme was designed to protect lenders from risk but the scheme has now closed. Some financial experts feared that first-time buyers would be faced with having to pay larger deposits to obtain mortgages.

The research by Money Facts has revealed that there are still plenty of mortgages available for first-time buyers who cannot afford a large deposit.

In February 2012, there were just 59 mortgage deals available for a 95% deposit. This has risen sharply to 276 low-deposit mortgage products from 53 lenders. This is a rise on the 253 offers available when the Help to Buy scheme was in force.

Money Facts attributes the rise to fierce competition between lenders and the fall in interest rates.

Though the government no longer guarantees low-deposit mortgages, lenders can safeguard their mortgage payments through mortgage protection insurance or income protection insurance. For those taking a professional approach, a broker can arrange both a low-deposit mortgage and protection insurance for people buying their first home.

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