First time buyers with small deposits have more mortgage options

Saving for a deposit is often the biggest challenge first-time buyers face but increasing numbers of lenders are introducing new mortgage deals which only require a 5% deposit. HSBC and Atom Bank have both launched new mortgage products for first-time buyers in recent weeks. Here’s what they’re offering.Atom Bank’s mortgages for first time buyersDigital Mortgages by Atom Bank has introduced a range of first-time buyer mortgage deals which come with £500 cashback, no product fees and a free valuation. The mortgages are available to those borrowing from 80% up to 95% of the property value, so even those with only a small deposit saved up are eligible. There’s no maximum loan limit, which is likely to prove particularly useful for first-time buyers purchasing properties in the capital, where property prices are often steepest. Digital Mortgages has also improved its criteria, including extending the maximum mortgage term available from 35 to 40 years. It also reduced the proof of employment history that mortgage applicants need to show from three years to 12 months. HSBC’s 95% dealsHSBC has recently introduced a range of two, three and five-year fixed rate mortgages for first-time buyers and home movers with only a 5% deposit to put down. There is no product fee to pay, and deals come with a free valuation. The maximum loan amount available is £400,000. The bank has also just increased its maximum mortgage term from 30 years to 35 years. The longer the mortgage term you choose, the lower your monthly payments will be, so this should help those on lower disposable incomes, particularly first-time buyers. However, remember that even though monthly payments cost less if you opt for a longer term, you’ll end up paying more overall, as you’re ultimately increasing the amount of interest you’ll have to pay back. If you’re not sure which mortgage deal is likely to be right for you based on your individual circumstances, seek professional advice. A broker can crunch the numbers on your behalf to help you find the best deal to suit your needs.