Getting a foot on the property ladder can be tough. That’s why many lenders, including HSBC, offer 95% loan-to-value (LTV) mortgages to first-time buyers.
A 95% LTV mortgage allows you to borrow up to 95% of your property value or the purchase price, whichever is lower.
If eligible, this would mean that you’d only need to contribute a minimum 5% deposit. So, if you want to borrow £200,000, you’ll need a £10,000 deposit.
A mortgage deposit is the amount of money you pay upfront towards the price of your new home. The rest is covered by your mortgage.
Your deposit is what determines the loan-to-value (LTV) ratio of your mortgage. This is the value of the property compared to how much you need to borrow. For example, if you put down a £50,000 deposit to buy a £250,000 home, your LTV will be 80% – as you’ll need to borrow 80% of the home’s value.
Saving up a bigger home deposit could mean you’re more likely to be accepted for a mortgage. It can also mean a lower LTV as you’ll need to borrow less. This can give you access to lower interest rates and, therefore, lower monthly payments.
You’ll need to provide evidence of any deposit you're planning to make towards the property when you apply for a mortgage.
The deposit is usually paid when contracts are exchanged.
House prices can vary depending on where you live. Let’s say you’re looking to buy a house for £200,000:
It’s important to work out how much you can afford and have enough left over to cover the costs involved in buying a property.
Use our calculator to get an idea of how much you could borrow based on your income.
Most lenders require at least a 5% deposit before they agree to lend you the rest.
Mortgages with zero deposits are known as 100% mortgages. With these, you would borrow the full amount. So, if the home costs £180,000, you would borrow £180,000.
100% mortgages are often guarantor mortgages, where someone will guarantee to repay the debt if the borrower can’t. This option requires careful consideration, so it’s important to do your research.
Please note – HSBC doesn’t offer 100% mortgages or guarantor mortgages.
Yes, you can. Usually given by relatives, a gifted deposit is a cash gift you use to pay for some, or all, of a mortgage deposit.
If your deposit is being gifted to you, your Solicitor will need to obtain a letter from the donor confirming the deposit is a non-refundable and unconditional gift and that no interest is being claimed on the property. This is known as a gifted deposit letter.
Your home may be repossessed if you do not keep up repayments on your mortgage.
