How to buy a home with less than £10,000 - but is a small deposit mortgage wise?

This is Money Podcast

This is Money

Business News, Business, Investing, News

4.1 • 650 Ratings

🗓️ 18 May 2018

⏱️ 42 minutes

🔗️ Recording | iTunes | RSS

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Summary

High house prices mean that the biggest barrier to buying a home in Britain is raising a deposit.

With mortgage interest rates at near record low levels, many would-be homeowners could afford monthly payments - but saving the average £30,000 deposit would take years.

For a lot of first-time buyers that means a trip to the Bank of Mum and Dad, but what if that's not an option?

It is possible to buy a home without raising tens of thousands of pounds, if you take a 95% mortgage.

With one of these deals, a first-time buyer able to pass mortgage affordability tests could put down a 5% deposit of £10,000 and buy a £200,000 home.

But is that a good idea? Didn't small deposit mortgages crash the economy a decade ago? Are they not leaving themselves heavily overexposed to falling house prices?

In this week's podcast, Simon Lambert and Georgie Frost dig into the world of buying a home with a small deposit mortgage, busting the myths and considering the benefits and the risks.

They also look at whether giving buy-to-let landlords a tax cut to encourage them to sell could provide first-time buyers and home movers with a leg up, if a £10,000 bonus for all 25-year-olds would help, and after the dead cert rate rise that never happened, when will the Bank of England move?

Enjoy.

Transcript

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0:00.0	Welcome to This Is Money Podcast in partnership with NSN. I'm Georgie Frost and with me is editor Simon Lambert.
0:07.6	We'll be discussing buying a home with a small deposit. Yes, it's possible, but should you?
0:12.8	Simon proposes a controversial tax cut for buy to letters, which he said could help first-time buyers.
0:18.8	We'll look at the intergenerational financial divide.
0:21.7	What can be done about it?
0:22.9	Does it even really exist?
0:24.8	And the year-long pay squeeze is over.
0:27.6	But what next?
0:28.4	For interest rates after that dead certain hike that never arrived?
0:33.3	Don't forget you to stay up to date with all the latest breaking money news.
0:36.1	Just go to this ismoney.com.uk or download the app.
0:41.1	This is Money, brought to you in partnership with NS&I, where safer savings set you free.
0:49.0	But first, bung millennials 10 grand cut tax for buy-to-letters. These are just some of the latest ideas
0:55.9	doing the rounds to help people get on the property ladder. Will they work? Is all this meddling
1:00.9	only exacerbating the housing problem in parts of the country? We'll be discussing some of these
1:05.7	proposals in more detail shortly. But the big issue we hear facing those wanting to buy,
1:11.6	currently renting, is finding the deposit. But with big issue we hear facing those wanting to buy, currently renting,
1:18.3	is finding the deposit. But with the increase in 95% mortgages and an increasing willingness of lenders to actually lend now, it can be done with under 10 grand. But just because you could
1:25.3	do it, should you? What are the things you need to think about?
1:30.0	Well, welcome, Simon.
1:31.3	How on earth are you able to buy with under £10,000 deposit?
1:36.7	Whenever we've spoken about this in the past, this has been the big stumbling buck, hasn't it?
	...

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