How can I get on the property ladder without a deposit?
Answer
In How to Really Buy a Property I'll show you ways and means to get on the property ladder even if you don't have the 5% cash deposit you think you need.
Options range from specialized mortgages to mouse holding to purchasing on specific new developments.
Perhaps you won't be able to buy exactly what you want but you will get a foot on that all important ladder and as your property price rises it will provide you with a deposit for your dream pad.
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Search Results for 'deposit' in
How to Really Buy a Property
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Chapter 2:
The Media and Property Prices
"... are often dressed up as the victim for the purposes of making a good story.
Here are another set of facts:
Mr Y used every last penny of his savings on a deposit for a buy to let
Mr Y did not make any contingency plan for what to do if the property did not let immediately
The property..."
Chapter 5:
Is the Property Market Overvalued?
"... than salaries.
In the 1990s it was 100% mortgages which rid the need for buyers to find a deposit. In the millennium it is shared ownership so the buyer only needs to find 50% of the property value or mortgages spread over more than the traditional twenty-five years.
Making predictions..."
"... cannot be believed.
Now a more bullish clerk comes along and knows of a client that wants to borrow £2,500 in 5 years time. He looks at Mr A's account and says, 'Ah, Mr A - on average - deposits £1,000 every 10 years so I can use his money to lend to my client.'
Both clerks are using..."
Chapter 8:
Buying to Let / For an Investment
"... large number of unsold properties also meant that the developer decided to rent out unsold properties as they were finished which lead to dozens of apartments being available at the same time. Private buyers found it difficult to find tenants who were prepared to pay the rent needed cover the buy-to-let mortgages. So extreme was the situation that several buyers seriously contemplated failing to complete and loosing their £30,000+ exchange deposits as a better alternative to completing and selling for far..."
"... the end the properties, both still vacant, were repossessed by the bank and Anthony's great property investment had cost him over £120,000. £76,000 for the original the deposit, £18,000 for the property investment company's fee, £10,700 in stamp duty and £15,600 in mortgage repayments that he ultimately could not keep up..."
Chapter 9:
Getting on the Property Ladder
"... you want them to be, in your own home. How to get someone else to pay your first deposit;
Why buying a less desirable property can help;
When 100%+ mortgages are not evil;
Working out if you are better off..."
"... rises.
There are a couple of myths which need to be set aside. Myths that stop many people trying to get on the ladder.
Myth: You need a 5% deposit
Myth: You can't afford to buy where you want
Knowing that the market will continue to rise over the long term means many buyers..."
"... they will never be able to buy a property in an area they want and so give up and resign themselves to years of renting.
- The deposit for Buying a Property -
Almost everything you read will tell you that in order to buy your first place you will need a cash deposit of between 5 and..."
"... Buying a Property -
Almost everything you read will tell you that in order to buy your first place you will need a cash deposit of between 5 and 10%. As such many first time buyers wait and save while pouring money down the drain in rent. There are three ways round this:
Buy in a new..."
"... first time buyers wait and save while pouring money down the drain in rent. There are three ways round this:
Buy in a new development where the builder offers to pay your deposit
Get a mortgage for 100%+ of the property value
Buy somewhere that you don't want to live!
- Buying..."
"... the papers and surfing the net will give you no end of new developments where the builder is offering special deals on selected plots. These may be free flooring, stamp duty covered, or more significantly a 5% or 10% deposit paid. Many buyers avoid these because their dream property is a twee Victorian flat with fireplaces and walls that seep period..."
"... that you are not looking for your ideal property, you haven't got the deposit so by definition you cannot afford it. You are looking for a stepping stone to your ideal property. If you are also financially stretched, even if someone else would be happy to pay your deposit on that lovely Victorian flat, what happens when the roof needs to be replaced and each leaseholder has to find..."
"... are usually guaranteed for ten years.
A newly built property's value will change in the same manner as the rest of the market. When prices are rising you are gathering equity (profit) which will eventually become the deposit on your dream property.
Do not however assume that the new..."
"... says the first property you buy has to be one you actually live in? You can, for example, buy a property anywhere you can afford it. Rent it and wait for it to rise in value. You can then sell it or re-mortgage it to provide the deposit and/or purchase price for the place you actually want. Remember a canny buy in a particular area means you could outpace the prices in the place you want to live. For example in the London postcode of E3 between 2000 and 2004 the average price of a flat rose from £108,952 to £178,411 or 64%. Over the same time a flat in SW1, a much more desirable area, moved from £338,632 to £444,654 or 31% ...."
"... out of town option has become more attractive because for Buy-to-Let mortgages you will need a 15%+ deposit and this is more affordable with cheaper properties in towns, rather than cities. The downside is that a property three hours drive away is difficult to manage or find tenants for and so you will probably have to pay agents to carry out most of the work for..."
"... better off today. Another way to look at it is this:
Scenario One:You spend three years saving up a deposit because you don't want a 100% mortgage and buy a flat for £200,000. Three years of renting could easily have cost you £36,000.
Scenario Two:You spend three years saving for a deposit..."
"... cost you £36,000.
Scenario Two:You spend three years saving for a deposit and spend £36,000 on rent but the market moves down 10%. You save £20,000 on the property you were looking to buy but with the rent taken into account the delay has still cost you £16,000.
Scenario Three:You spend..."
"... into account the delay has still cost you £16,000.
Scenario Three:You spend three years saving for a deposit and the market moves up 10%. You have lost £36,000 in rent payments and £20,000 in capital gain. A total cost of £56,000.
Scenario Four:You buy a flat for £200,000 with a 100%..."
"... 125% mortgages are also useful in that they provide you with extra capital to improve the property. Done properly this will secure your investment's value. Further it may help rid you of credit card debts and other high interest loans that were stopping you raising the deposit in the first place.
..."
"... the deposit in the first place.
If you have no debts then the extra 25% could even be the deposit on your dream property. Within the space of 6 months you could have gone from owning nothing to lording over the embryonic beginnings of a property portfolio.
100%+ mortgages are not the evil..."
"... - Summary -
The greatest hurdle to buying a property is often the deposit. Your salary might well show that you can afford the monthly payments of a mortgage but saving for the deposit (while your hard earnings are being syphoned off renting a place) can be near impossible.
There are a..."
Chapter 11:
Sorting Out Your Mortgage
"... should see as many financial advis0rs as you see agents. After the first two or three you will soon get the hang of what they want to know and so the time it takes to get further quotes reduces exponentially. Classic information you will need to have at hand include your earnings, how much deposit you have, any debts or arrears, etc., etc. The reasons for spending so much time with these people are..."
Chapter 12:
Choosing a Conveyancer or Solicitor
"... the right solicitor has nothing to do with price, this is truly a field of getting what you pay for. If you are at offer stage and almost all of your savings have been taken up in deposit money and stamp duty it's tempting to try and save a few hundred pounds on the legal services. It's also a mistake that you will kick yourself for as you sit on hold, or wait for your fourth call of the day to be returned, or chase them to raise the enquiries that will allow..."
Chapter 14:
Viewing Properties and Making Offers
"... in Principle or Pre Arranged Mortgage - see Sorting Out Your Mortgage - to show you can afford the property
A copy of your bank statement to show you can afford the deposit
An Agreement in Principle (AIP)
If you will need a mortgage to buy a property the lender will be able to..."
"... and solicitors will need some badgering to make it happen.
If a property is advertised as tenanted and you want to buy it that way it is always worth checking what references the tenants provided and what deposit they have lodged.
- Cash Purchase Only -
These are few and far between and..."
Chapter 15:
How to Really Make an Offer on a Property
"... can save you money;
What should be in your offer apart from the price;
How to make a low offer seem attractive to a vendor;
Why non-refundable deposits rarely work.
- Listening to the Estate Agent -
If you have read everything in the previous chapters you will be pretty worldly wise..."
"... are included. Can you confirm this?" If there are any problems offer a nominal amount, say £1,000 more to get things your way.
- Non-Refundable deposits -
Many buyers are often at pains to show how serious they are about the property they have offered on. As such they offer to pay a..."
"... buyers are often at pains to show how serious they are about the property they have offered on. As such they offer to pay a "non-refundable deposit" to the vendor as a sign of their honourable intentions. Estate agents are not allowed to handle these transactions so they must be done through the..."
"... such your non-refundable deposit would have to be subject to these and a whole range of other problems. Before you know it your non-refundable deposit is subject to contract and subject to survey and of no security whatsoever to the vendor. Furthermore it will have taken so long to agree the terms of a non-refundable deposit that no work on the actual purchase will get done. This is not a healthy scenario as we will see in Time Costs..."
"... scenario as we will see in Time Costs Deals
Solicitors that do agree to try and sort out such deposit can take weeks agreeing terms when they could be getting on with doing the paperwork that would allow you to exchange, complete and move in!
- Summary -
Many agents are poorly..."
Chapter 17:
The Property Buying Process in Theory
"... are two ways to buy a property. You can purchase for cash or by borrowing. Either way you will need to put down a deposit when contracts exchange and pay the balance on completion. The deposit is normally between five and ten percent of the agreed price although it is possible to exchange with anything from zero to one hundred..."
"... deposit is seen as a way of tying the buyer in and insuring the vendor will have some compensation should you disappear. Zero percent deposits are therefore usually only acceptable if you are carrying out a simultaneous exchange and completion. This is often the case with one hundred percent mortgages or where the property is empty and the buyer wants to get in..."
"... call you again once he receives it to confirm that you still want to exchange. He will also need:
To have a deposit in his bank account to give to the vendor's solicitor (see below).
To know the date you want completion to occur on
Once you give the green light he will call the..."
"... discussed in Specifying Exchange and Completion Dates (see above) your solicitor will usually need a cash deposit to give to the vendors' solicitor when exchanging contracts. The only exception is when you are using a one hundred percent mortgage or the vendor has agreed that you will provide a deposit of zero..."
"... is when you are using a one hundred percent mortgage or the vendor has agreed that you will provide a deposit of zero percent.
The deposit must be in cleared funds.
What Can Go Wrong
Your solicitor only asks for the deposit when he has received your signed contract and you have to write a..."
"... percent.
The deposit must be in cleared funds.
What Can Go Wrong
Your solicitor only asks for the deposit when he has received your signed contract and you have to write a cheque which takes five days to clear
The cash is in an account which restricts the amount that can be removed at..."
"... your solicitor has your signed contract and funds for the deposit, and the vendor's solicitor has the vendor's signed contract, exchange of contracts can take place. The money is sent electronically between the solicitors and they verbally agree that exchange has taken place at a specified time (say..."
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