Mortgage? London? Small deposit? There might be a chance!
Buying a home in London is daunting, especially if you have a small deposit. With housing prices significantly higher than other areas of the UK, it can be overwhelming for many potential buyers. Even so, a small deposit doesn’t have to be a setback. This is how you can maximize your chances at securing a mortgage in London with a small deposit.
Find Out the Deposit Requirements
The majority of lenders require at least 5% to 10% of the property price as a deposit. Even 5% in London may be a costly amount, especially for properties over £400,000. However, mortgage products for those with lower deposits are quite common. Some specialist lenders will even offer 95% LTV (loan-to-value) mortgages to first-time buyers with strong affordability.
Consider Government Schemes
The government has introduced various schemes to help small-deposit buyers onto the housing ladder:
- Shared Ownership: Purchase some of a house (eg 25%–75%) and pay rent on the rest.
- First Homes Scheme: New-build homes sold at a discount to first-time buyers and key workers for at least a 30% discount.
- Lifetime ISA: Save £4,000 a year maximum with a 25% government bonus on your first home.
We help clients on a regular basis to use these schemes in combination with conventional mortgages to maximize affordability.
Use a Mortgage Broker
Certain lenders on the high street have tight criteria, but a broker like Oportfolio can shop the whole market. We have access to specialist lenders who consider a wider range of applications, for example, those who have low deposits, non-standard income, or historical credit issues. We match applications to show your best points and improve your chances of acceptance.
Improve Your Financial Profile
With a small deposit, your financial background carries even more weight. Before applying:
- Check your credit score and address any issues.
- Pay off or reduce outstanding debts.
- Avoid new credit applications in the months leading up to your mortgage application.
- Demonstrate consistent income and spending habits.
Lenders want to see that you’re financially stable and able to manage repayments.
Save for Additional Costs
Even with a low deposit, buying a house is not free. Plan for:
- Stamp duty: Free for first-time buyers up to £425,000 but maybe paying some over that.
- Legal fees: Solicitor/conveyancer charge typically £1,000–£1,500.
- Valuation and survey fees: Varies with lender and type of property.
- Removals and furnishings: Easy to overlook but essential.
We help clients plan for these costs so they are not caught out with an unexpected charge.
Real Success Stories
We’ve helped dozens of London purchasers secure 5% deposit mortgages. One teacher who had little money to save acquired a shared ownership flat in Clapham with a £12,000 deposit and now has a 50% stake in a £320,000 property. Clever guidance and tailored advice were the secrets.
You Can Buy Sooner Than You Think
Don’t let a small deposit stop you from buying your own London home. The right guidance, a well-prepared application, and exposure to the right lenders can make homeownership closer than you think.
Phone Oportfolio now to talk about your options and get the ball rolling on turning your dream house into reality.
