No Deposit

Posted on 25 May 2012 by Laura

We have found the house of our dreams at £113,000 and am confident we can afford mortgage repayments (we earn 17k+ each) and also the repayment of a loan for the depsoit. However, I know that mortagge companies will not accept a loan as the deposit. Is there a way around this and are there any other options to purchasing this property when we dont currently have any deposit saved?


The reason lenders do not like people borrowing the deposit from another source is past experience has shown these borrowers are the most likely to not meet their mortgage commitments and end up being repossessed.  If you do not have a personal stake in a property there is no real incentive for you to make sure payments are made as you have nothing to lose.

There is no legal way round this without coming up with a deposit from an acceptable source or taking one of the few 100% mortgage schemes.  For most people the deposit will either come from savings or a gift from their parents.  To qualify as a gift there must be no requirement for the money to be repaid and it is usual for lenders to ask for a declaration to be signed to this effect.

The lenders who consider 100% mortgages where no deposit is required, have with very stringent conditions including taking a charge against the parent's property.  In the event of you not being able to pay the mortgage and being repossessed the lender could feasibly force the sale of your parents property to cover any loss.  They do however mean that you can get a foothold on the property ladder and if you would like to know more about these please call 0344 346 3672 and tell the consultant the date and title of your question, they will then be able to help you.


Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.

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