5k Deposit Mortgage

The 1% deposit mortgage by Accord Mortgages Limited is an innovative new product targeted to help first-time buyers step onto the property ladder.

Lower Deposit Requirement

The most significant advantage of a 99% mortgage is that homebuyers won’t have to save for years to build up a deposit if they want to buy a property.

Increased Accessibility

This type of mortgage could make homeownership accessible to those who might otherwise struggle to save a larger deposit, particularly if they’re currently renting.

However, it comes with certain restrictions, for example –

• At least one applicant must be a first-time buyer, defined as never having previously owned a property.
• The application cannot include background properties like buy-to-lets.
• It’s only for residential mortgages
• Applicants must have a minimum £5,000 deposit.
• The product can be used to buy a property worth up to £500,000.
• You will need to pass stringent affordability and credit checks.

But be warned, there is a lot to think about before you jump into taking a mortgage where you only own 1% of your home 

Risk of Negative Equity

If property prices fall, borrowers could end up owing more than their property is worth. This situation, known as negative equity, can make it difficult to remortgage or sell the property.

Higher Interest Rates

A 99% mortgage will naturally have higher interest rates than a mortgage with a lower Loan-to-Value (LTV) percentage. This could lead to higher monthly payments.

Stricter Affordability Checks

Borrowers will likely have to pass stringent affordability assessments and credit scoring, particularly if borrowing more than 95% LTV3.

It’s important for potential borrowers to carefully consider these factors and seek professional advice before deciding on a 99% mortgage. While it can provide a valuable opportunity for first-time buyers, it also comes with its own set of risks and challenges.