First-time buyers with a smaller deposit to put down can now purchase a flat using the £5k Deposit Mortgage from Yorkshire Building Society and Accord (Yorkshire’s Intermediary arm).
This mortgage was previously only available to those buying non-new build residential houses, but it has now been extended to flats, following direct feedback from brokers.
The £5k Deposit Mortgage allows buyers to borrow up to 99% of the property value. This enables First Time Buyers with a £5,000 deposit to purchase a property valued up to £500,000.
This mortgage was originally launched after research by Accord’s parent company, Yorkshire Building Society, found that saving a deposit remains one of the biggest obstacles facing first-time buyers. For example, someone saving a 10% deposit to purchase an average first-time buyer property costing £200,000 would need to save up £20,000, which could take many years given steep living costs and high rents.
According to the building society’s analysis, carried outlast year, two-fifths (59%) of first-time buyers said they were at risk of giving up on the idea of homeownership altogether due to worries about the financial commitment a house represents, as well as feeling overwhelmed by the complexity of navigating the current market.
Jeremy Duncombe, managing director of Accord Mortgages,said: “We’re delighted to be able to now extend its availability to people purchasing flats too, given our analysis since launch suggests this change will be particularly beneficial to people in city centre areas like London, the South-East and parts of Scotland, where property prices tend to be higher and flats are therefore a popular choice.”
Accord has also reduced the rate on the £5k Deposit Mortgage, which should help first-time buyers who are facing affordability challenges.
There are several other lenders, including Nationwide and Halifax, which also offer mortgages that are specifically designed to support first-time buyers with only a small deposit to put down.
