You’ve got some options (Picture: Getty Images/iStockphoto)
Since getting on the property ladder can cost a pretty penny, most home-owners end up with a mortgage.
For a traditional mortgage, you’d usually need to save between 5-15% of the cost of the home you want for a deposit.
It’s not unheard of for deposits to be as much as 20%.
But what if you want to bypass that step altogether?
Do you need to deposit to buy a house?
The simplest way to eliminate the need for a deposit is to buy a house outright.
However, that’s not an option many people have available to them, especially with property prices at record highs recently.
Alternatively, you could opt for a new build developer loan, which is when a property developer offers a loan to use as a deposit when you buy a new home of theirs.
This means you’d have to pay your mortgage and the new build developer loan repayments too.
There are downsides to any option (Picture: Getty Images/Westend61)
Another way to avoid saving for a deposit is to secure yourself a 100% mortgage – but doing so isn’t easy.
100% mortgages are loans that allow you to borrow 100% of the value of the property you’re after.
To secure one, you need to have a guarantor, meaning a close family member will need to agree to be liable should you be unable to make the repayments.
There are a few different kinds of 100% mortgages, including family deposit and family offset mortgages – where your guarantor deposits a percentage of the property’s value into a savings account where it’s held as security against the mortgage – and what’s often referred to as ‘family link’ mortgages – which is a combination of 90% mortgage and 10% loan.
For a family link mortgage, your guarantor will need to be without their own mortgage, and their property could be used as collateral if you fell too behind on your payments.
Not only do interest rates tend to be higher with 100% mortgages, but it’s pretty hard to be approved for one – if you’re in debt or have a low credit score, having a guarantor may not be enough.
If you do get a 100% mortgage, since you’d have more to pay off, there’s also an increased risk of owing more to your lender than what your property ends up being worth down the line should it fall in value.
This could mean you end up with shortfall to deal with if you wanted to move or remortgage.
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