Accord Mortgages are offering a 5k deposit mortgage exclusively for first time buyers, giving them a leg up onto the property ladder.
For first time buyers, the biggest obstacle to buying your first home is often the deposit. It’s not easy to save up 10 or 20% of a property’s value, and for many, it can be what holds them back. The good news is that Accord Mortgages might have the answer with their new £5k Deposit Mortgage.
What is Accord’s 5K Deposit Mortgage?
Accord have launched an exclusive product – a first-time buyer-only mortgage that requires a minimum deposit of £5000! Also dubbed the ‘1% mortgage’, this mortgage product includes a maximum loan-to-value of 99%.
The minimum you can borrow on this mortgage is £95,001 and the maximum is £495,000, meaning you can use this mortgage for properties worth up to £500,000!
It can be taken out for a maximum of 40 years but must not go past the mortgage payer’s 70th birthday.
Originally only available for houses, Accord’s 5K mortgage can now be used to buy houses and flats but does exclude new builds.
This product is available on a 5-year fixed rate.
Who is eligible for Accord’s 5K Deposit Mortgage?
To be eligible for the 5K Deposit Mortgage, you must meet a few key criteria:
- You must be a first-time buyer
- You must have indefinite right to live in the UK
- The maximum age you can be at the end of the mortgage term is 70 years old
A member of our expert mortgage team can help you if you’re unsure about any of the eligibility requirements.
Can I get the 5K Deposit Mortgage on a Joint Application?
Yes. If you’re applying for a mortgage with someone else on a joint application, you can still apply for the 5K Deposit Mortgage even if one of you is not a first-time buyer. The rules state that at least one applicant must be a first-time buyer, and there can be no background properties on the application.
For more information on joint applications, read our joint mortgages guide.
Can I use a gifted deposit on a 5K Deposit Mortgage from Accord?
Yes. If you’re unsure what this means, a gifted deposit is when an applicant uses funds gifted to them as the deposit for their property purchase. You might use it to fund all or only part of the deposit, and you must be able to provide evidence that it is in fact a gift, and the donor does not expect any claim to the property in return.
For Accord’s 5K Deposit Mortgage, a gifted deposit is acceptable, but only from family members. If you were hoping to use funds gifted by a friend, you’re unlikely to be successful.
For more information on gifted deposits, read our gifted deposits guide.
Can I get a 5K Deposit Mortgage with a poor credit score?
Accord’s 5K Deposit Mortgage is a high loan-to-value product. Loan-to-value (LTV) is the percentage of a property's value that you're borrowing through a mortgage, the rest made up by your deposit.
With high loan-to-value products, there is more risk involved for the lender. For them to want to take that risk, they usually require strong credit profiles from their applicants. So if you have bad credit, you might not be accepted for this mortgage product.
Pros and Cons of Accord’s 5K Deposit Mortgage
Accord’s 5K Deposit Mortgage is a helpful product for first-time buyers. Here are some of the reasons you might want to consider it if you’re getting on the property ladder:
- Lower barrier of entry: The low deposit requirement means buyers can enter the property market sooner, reducing the time spent saving for a large deposit.
- Financial flexibility: Using less of your savings on a deposit means you can allocate some of your funds towards other expenses you might have when buying a home.
- Predictable budgeting: The five-year fixed interest rate means you know exactly what you’ll be paying in monthly repayments for the next five years. No surprises or shock expenses!
As with any mortgage type, there are risks to consider with Accord’s 5K Deposit Mortgage.
- Higher interest rates: A higher LTV ratio can mean higher interest rates compared to mortgages with larger deposits.
- Lower equity: By paying a small deposit upfront, you start your home ownership with only a small amount of equity in your property. This can mean it will take longer to build ownership in it.
We recommend considering making overpayments in the future if you can afford it, to increase equity. Accord allow a 10% overpayment allowance per year.
How much can I borrow?
Interested in seeing how much you can borrow? Use our mortgage calculator to find out what you can afford with a 5K deposit.
Speak to The Mortgage Hut today
The 5K Deposit Mortgage introduced by Accord is a helpful option for first-time buyers who are struggling to gather a large deposit. Especially if they don’t fancy the idea of spending even more time saving!
If that sounds familiar, speak to a member of our team. We’re experts in low deposit mortgages and can help guide you with your application to ensure you put your best foot forward and boost your chances of approval. Contact us today.
FAQs
Can I buy a flat with the 5K Deposit Mortgage?
Yes, as of the last, update, Accord’s 5K deposit mortgage can be used to buy
both houses and flats – but new builds are excluded.
Can I still apply for Accord’s 5K Deposit Mortgage if I
have a larger deposit saved?
Yes, even though the mortgage is designed for applicants with small deposits, you
can still apply with more saved up. If you decide not to use it on the deposit,
it can go towards other home-buying costs – like furniture!
