Five Questions About: Small deposit mortgages

What's the most I can borrow?

Most banks and building societies (around three-quarters of the market) offer mortgages of up to 90 per cent of the cost of the property. Only 14 UK lenders still offer mortgages to borrowers with just a 5 per cent deposit. Most of these are building societies.

Will my rate be higher if I only have a small deposit?

Yes. The average rate for a 95 per cent loan-to-value mortgage deal is 5.67 per cent, while at 90 per cent it's 5.28 per cent. But, if you put down a 25 per cent deposit, the average rate plummets to 3.69 per cent. Shop around for the best deal.

What are the best low-deposit mortgages?

If you have a 10 per cent deposit, HSBC offers a two-year discount deal at 3.84 per cent with no fee. For those with a 5 per cent deposit, Market Harborough has a 3.99 per cent discount for the term of the mortgage, which comes with a £95 fee and 2 per cent early repayment charges for the first two years. However, a family member is required to invest another 20 per cent of the purchase price with the building society for five years.

How long will my mortgage take to process?

So long as you don't encounter problems, your loan should be processed in around two to three weeks.

What's the hurry?

The 0 per cent stamp duty concession for first-time buyers on homes costing up to £250,000 expires on 24 March. First-timers completing on a sale after this date will need to pay 1 per cent on homes costing between £125,000 and £250,000. This means missing out on a saving of up to £2,500.

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