What is a down payment?
The average down payment in the UK is around 20% of the property's value. A down payment (or a deposit) is the lump sum of cash needed to secure a property, and one of the biggest challenges that prospective homeowners face.
Initiatives to get a down payment with limited savings
- Finding down payment deals
Low deposit mortgages are available through certain lenders, allowing first-time buyers or current homeowners to secure a home with a smaller deposit. These mortgages often offer competitive interest rates. One of our advisers can help you find the most suitable deals available.
- Deposit Unlock
This scheme, offered by select property developers, allows home buyers to secure a 5% deposit on new build properties. The home builder insures the mortgage, enabling the buyer to obtain a more favourable loan-to-value mortgage from lenders.
- Immediate Rent and Rent to Buy
The Immediate Rent scheme is designed for individuals planning to purchase a property within the next five years. It allows them to rent at a subsidised rate, helping them save money more effectively for a future home purchase.
Under the Rent to Buy scheme, tenants initially rent a property at a reduced rate, with the option to purchase the property later on a Shared Ownership basis. This means they can buy a share of the property and pay rent on the remaining portion, gradually increasing their ownership stake over time.
- First Homes
The First Homes scheme benefits local people and keyworkers looking to buy homes in high-demand areas by offering a discount of 30%-50% off the market value. This significant reduction in price means that the required down payment is smaller, making homeownership more accessible.
- Shared Ownership
This allows buyers to purchase a percentage of a property, making it easier to get onto the property ladder with a smaller down payment. A share of the home is bought (starting as low as 10%) and then rent is paid on the remaining portion, with the option to buy more shares over time.
- Get a guarantor
Having a guarantor can help lower the required down payment. A guarantor provides additional security to the lender by agreeing to cover the mortgage payments if the borrower is unable to, reducing the lender's risk.
How to optimise your current savings
Lifetime ISAs enable buyers to save up to £4,000 a year towards a deposit. The government adds a 25% bonus to the savings, contributing up to an additional £1,000 a year.
Many of us have savings accounts that aren't earning their potential. When it comes to banking, a 'shopping around' approach is best. You can compare saving rates, and take advantage of rewards for switching bank accounts.
Putting aside a set amount of savings each month doesn't work for everyone. With an automated savings account you select the amount of money that can be comfortably taken from your account, automatically withdrawing at regular intervals.
Connect with one of our team of mortgage advisers to navigate through the variety of options.
