Low deposit mortgages are making a come-back

Mortgages with low deposits and very high loan-value ratios were ubiquitous on the UK market before the financial crash of 2007-08, after which their presence dwindled rather substantially.

However, banking giants Santander and Nationwide Building Society have both just announced their launch of mortgages with a loan-value (LTV) ratio of 95%, meaning that the borrower will only need to come up with a deposit of 5% of the property value.

Given the average property price in the UK at the moment, that means that the typical borrower will only need to come up with roughly £13,850 in order to take out one of these mortgages, supposing their credit score is up to scratch.

For Nationwide, it is the first product of itís kind that they have released since 2008, in a move that ìsignificantly increases the societyís lending in the first time buyer market and widens consumer choiceî according to their head of mortgages, Henry Jordan.

Santander noted that the impending end of part of the Help to Buy government scheme in 2016 has had a part to play in these new mortgage offers coming to the table, but they were also keen to emphasise that they were ìready to extend [their] commitment to lending up to 95% loan-value [mortgages] without the need to government support.î

Santanderís positivity is echoed in the feelings shared by Aaron Strutt, mortgage broker for Trinity Financial, who noted how ìgreatî it was to ìsee more lenders offering straightforward 5% deposit mortgages and specifically targeting first time buyersî in what Santander are now describing as ìa healthy market for customers with smaller deposits.î

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