15% deposit mortgage (mortgage requirements, monthly repayments etc)
15% deposit mortgage
Mortgages which allow a 15% mortgage deposit are also known as 85% Loan to value mortgages.
With a 15% deposit mortgage you will only have to put 15% down as a mortgage deposit but this may mean you fall in a more expensive loan to value band.
In some cases, increasing your mortgage deposit from 15% to something higher may put you in a cheaper loan to value band and give you access to mortgages at cheaper rates.
15% deposit mortgages are much more common these days and you can access a host of mortgages with even a 5% mortgage deposit.
How will a mortgage lender assess you for a 15% deposit mortgage
To get a 85 LTV mortgage, the mortgage lender will first want to see that you have a mortgage deposit of 15%.
Example on a £100,000 home you will need £15,000 for an 85 LTV mortgage.
Once the mortgage lender is satisfied you have the mortgage deposit they will then perform a soft credit check on your credit profile to give you an agreement in principle.
This is an indication that they are willing to lend to you with a 15% deposit mortgage but this agreement in principle could very well be declined after your property valuation which is the next step.
Mortgage lenders have it within their rights to withdraw a mortgage offer at any time before completion.
This means if they find anything wrong with your 15% mortgage deposit application then they could withdraw the mortgage offer.
The mortgage lender will usually perform a property survey at your cost and then analyse your financial information to be sure you make the necessary income to qualify for the mortgage.
If everything looks fine then the mortgage lender will produce a mortgage offer for your 15% deposit mortgage.
Alternatives to a 15% deposit mortgage
If you can’t save up the 15% mortgage deposit needed to make you eligible for a 85 LTV mortgage then you may be able to access a range of 100% LTV mortgages.
They are a certain type of mortgage known as a family springboard mortgage, they include mortgages from lenders such as the Barclays family springboard mortgage, the Lloyds lend a hand mortgage or the post office family link mortgage.
How to get a 15% deposit mortgage
You can access a range of 85 LTV mortgages if you have a 15% mortgage deposit but that might be too much for you to save.
But don’t be too worried, the governments here to help you with its home-buying government schemes which can either reduce the total price of your home purchase or an equity loan towards your mortgage deposit.
The government schemes you can use for a 85 LTV mortgage include:
- Lifetime ISA– gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
- Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
- Help to buy equity loan– gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
- Shared ownership- You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
- Armed forces help to buy- similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
- Rent to buy- This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
- Right to buy- allows you to buy your home at a discount price.
- Preserved right to buy– same as above.
- Right to acquire- same as above.
Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.
Where to get a 15% deposit mortgage
To get a 85 LTV mortgage you can either go directly to a mortgage lender or to a mortgage broker.
If you are considering getting a mortgage for 85 LTV then using a mortgage broker may be a good choice as mortgage brokers usually have access to many more products than any specific mortgage lender.
Mortgage brokers will also usually have access to specific deals from mortgage lenders as well as experience on which mortgage lenders will be more likely to accept your case. This will help you avoid getting rejected on a mortgage application and having to build credit due to the damage a rejection might do to your credit score.
If you have bad credit or are self-employed then specialist mortgage brokers such as bad credit mortgage brokers or self-employed mortgage brokers may be useful.
Can you get a 15% deposit mortgage with bad credit
Getting a 15% deposit mortgage with bad credit may be possible but most mortgage lenders will expect you have a good enough credit score and are not currently bankrupt.
If you are bankrupt then you may need to wait for 12 months after you have been discharged from being bankrupt to get a 15% deposit mortgage
Bad credit may include:
What type of 15% deposit mortgages can you get
You can get a variety of 15% deposit mortgages. This include:
Fixed-rate 15% deposit mortgages:
With these mortgages, the rates are fixed for a period of 2, 3 or 5 years and provides you certainty over your mortgage term.
Variable rate 15% deposit mortgages:
You can access a host of variable mortgages through a mortgage lender and this mortgages will have a variable rate which can be increased or decreased at any time by the mortgage lender.
Tracker 15% deposit mortgages:
You can access a host of tracker mortgages from most mortgage lenders. These mortgages will usually track the bank of England’s rate and will move in line with it although it may not be the exact rate but rather a rate which will increase by the same point or increase by the same point as the bank of England rate.
85 LTV Remortgages:
You can access a host of remortgage options for a 85% loan to value remortgage.
85 LTV buy to let mortgages:
Some buy to let mortgage lenders have a minimum amount they will lend but you may be able to get a 85% loan to value buy to let mortgage with some specialist buy to let mortgage lenders. A buy to let mortgage broker will be able to assist you in this regard.
What documents will you need for a15% deposit mortgage
For a 15% deposit mortgage, you will need the same documents as any other mortgage.
- Your bank statements for the past 3 months
- Your payslips for the past 3 months
- Your tax returns
- Your utility bills in your current home
- Your driver’s license
- Your passport
If you need financial advice and you live in the UK then you could contact the Money Advice service over the phone or via chat for impartial advice.
You can also contact the debt charity “Step Change” if you are in debt and need help.