Buying a new home is understandably a financially fraught time, and is likely to be the biggest investment you'll ever make. Bricks and mortar remains a strong investment method despite external pressures—with diminishing disposable income being the biggest challenge.
To afford a home, most people need to borrow money from a reputable lender. Before a mortgage lender will even consider providing a loan, you'll need to have saved up a deposit.
This is why low-deposit mortgages are particularly attractive to many homebuyers.
Availability reaches post-2008 high
Low-deposit mortgages have been in the spotlight before, particularly when product availability dropped after the pandemic shockwave. However, new figures show that the availability of mortgages offering around 5% deposit has grown to its highest point since the 2008 financial crash.
Interest rates fall to three-year low
Analysis by Moneyfacts, the provider of financial information to the public and private sectors, reveals that interest rates have also dropped for these products. This makes them a strong option for first-time buyers entering the housing market, homeowners looking to upsize, or those remortgaging existing properties.
Moneyfacts notes that rates are now at their lowest since the September 2022 mini-budget.
Rachel Springall, Finance Expert at Moneyfacts, commented on the findings:
"The Government has been very vocal that it expects lenders to do more to boost UK growth, so the rise in choice and drop in cost is a healthy step in the right direction. However, deals at 95% loan-to-value only represent 7% of the residential mortgage market, so there is more room for improvement."
Further improvements expected
These improvements may well be coming down the line as mortgage companies endeavour to entice borrowers to use their products.
However, this is tempered by financial uncertainty in the broader sense. With the Autumn Budget approaching (26 November), leaks and speculation in the press suggest everyone might need to tighten their belts. Should some of the suggested budgetary changes be implemented—for example, higher rates charged on income tax—uncertainty about what the average person can afford to spend will increase.
On the other hand, if there are issues with paying current mortgage rates, mortgage lenders may reduce their rates further and continue providing low-deposit mortgage products as an enticement to uncertain borrowers.
Getting the right advice for your mortgage
Whatever is revealed in the budget statement, when it comes to choosing the mortgage product that fits your needs best, consider consulting a mortgage broker. They have knowledge of the vast array of mortgage products available on the market and can guide you through the maze of information to pinpoint exactly what product you want to choose.
The importance of conveyancing advice
You'll also want legal advice from an experienced conveyancing solicitor who will work to reach as early a completion date as possible. Look for fixed legal fee services underpinned by a no move, no fee guarantee, so you only pay the quoted legal fees if you successfully complete on the transaction.
What to expect from your conveyancing service
When buying or selling a home, you want the legal process managed with you and your needs at the centre—a top-quality service provided at a value-for-money price.
Your conveyancer should start work on your plans as soon as you agree to the quotation and appoint them to represent you.
Look for a quote that won't change—what you're quoted is what you pay for the standard conveyancing process, which means you can effectively budget for your conveyancing needs.
Some unforeseen items might arise during the purchase or sale, such as a specialist flood assessment report, but your solicitor should discuss these and their cost as they come up.
A 'no completion, no fee' promise ensures that should the purchase or sale not go through to completion, no payment is required.
Homeward Legal offers fixed-fee conveyancing with these protections. Call to get your conveyancing quote started, or get a quick quote using our easy-to-use quote generator.