Why having a deposit is so important when purchasing a property

Britain is a nation of homeowners – and for many people, taking the first or indeed the next step on the housing ladder is an important milestone to look forward to. But it’s far easier said than done to actually get on the housing ladder, and that’s down in part to the need to have a decent deposit.

This article will explore the role the deposit plays in the process, and what impact the pandemic has had on the mortgage market.

Small deposit?
For many first-time buyers, an ideal scenario might seem like one in which the borrowing is high and the deposit is low, the tried and tested 5% deposit mortgage.

The reason why this is so appealing is obvious: it means that you have to save (and possibly rent, or live with family) for a shorter amount of time because your deposit can be accumulated in a far shorter period. This scenario is often described as a high “loan to value” arrangement.

Prior to the COVID Pandemic, this scenario was accessible and easy, but we are yet to see 5% deposit mortgages return to the market. Just a decade or so ago it was the case that people looking to buy a home could turn up at a lender and in some cases access a no-deposit, 100% mortgage. But when house prices went down during the financial crisis, people ended up trapped because they owed the bank more than their house was worth – a phenomenon called “negative equity”. Since then, it’s become the case that 100% mortgages are impossible, and now a deposit is essential. Thankfully the idea of having more equity in property has risen in popularity, and some new buyers now aim to wait and have a perhaps a bigger deposit than they need before they buy.

The impact of COVID 19
The COVID 19 pandemic has worked its way into almost all aspects of our lives, and the housing market is no exception. When it comes to deposits, banks have – at least for now – taken some of their highest loan to value products off the market. “While towards the end of last year it might have been possible for a borrower to get a mortgage with just a 5% deposit, it’s now almost impossible to do” says Simon Hamilton, Mortgage Director of Hello Mortgage. In fact, it’s becoming increasingly apparent that any deposit under 10% or perhaps even higher might not be enough.

This is an understandable move on the part of the banks because higher loan to value mortgage and remortgage options are often perceived as risky. In an economic environment in which some people might face losing their jobs, banks may consider it likely that defaults will occur and hence make more cautious lending decisions. For a borrower, this could be frustrating – especially if you were close to reaching your goal only to have the goalposts changed. However, it’s perhaps for the best in the long run, as it helps defend homeowners against price drops.

“It is no secret that some of the better mortgage deals, mainly within the Buy to Let sector, are available only to those with a lower LTV, typically 70%. This is largely due to risk. Small deposits are great for helping people get onto the property ladder, but its always better to have as low a loan to value as you can” Says Keith Ahmed, MD of Hello Mortgage.

We are starting to see more lenders offer low deposit mortgages, but are yet to see the return of the 5% mortgage, the new normal at the moment is a 10% deposit.

The mortgage market
What some potential buyers don’t realise, however, is that there is a whole “mortgage market” out there which is packed full of diversity. While it’s unlikely that any provider is going to be offering tiny deposit mortgages any time soon, it also remains true that lenders differ from each other in all sorts of diverse ways and each one has a different product offer.

If a person looking to buy a mortgage heads straight to perhaps the same bank they have their current account with, they will only receive products offered by that bank. This may not, for whatever reason, suit their circumstances. Their bank may not offer suitably higher LTV mortgages, for example, or their bank may have unfavourable eligibility criteria on some products like restrictions on self-employed applicants or those with bad credit. Their bank may also not be charging the most competitive interest rates, either. For a savvy mortgage shopper, then, the solution is often to opt for some unbiased and independent mortgage advice.

Using Hello Mortgage as your local broker
The professional you need if you’re looking for independent mortgage advice is a Hello Mortgage broker. Our job is to assess the state of the market and to find a mortgage deal that works for you, which is often more efficient than going it alone. At Hello Mortgage we have access to powerful market knowledge, comparison software and direct relationships with lenders which we use to find you the best possible mortgage deal. After doing an initial fact-finding with you your local Hello Mortgage broker we will be able to assess the market quite quickly – and to find a good deal with low-interest rates tailored to your needs.

Not many people realise that brokers all charge differently for their services. Depending on various factors, such as the value of the mortgage, complexity, or loan type. We keep it simple; all our initial mortgage advice is free. We do not charge any fees for sourcing you a mortgage, only if you take a mortgage that we have recommend to you, and even then, our fee is only payable on completion.

Using a broker is even more prudent than ever during the pandemic given that the mortgage market has changed so much in the last few weeks alone. Those who are worried about what the circumstances of their case might mean for their application, such as those who only have a 5% or 10% deposit or those with specific requirements like a buy to let mortgage, should speak to us about what their options might look like in the post-pandemic world.

In sum, then, the world of mortgages has changed so much in the last month or two thanks to the coronavirus crisis. It’s now the case that getting mortgages is a little more complex, and it becomes even more complicated if you’re an applicant with a small mortgage deposit or a circumstance that doesn’t fit the average mould. But by speaking to one of our local mortgage brokers near you, you can get up to date mortgage advice which reflects your own personal circumstances and helps you plan for the future, for free.

Hello Mortgage, really are the best mortgage brokers to have on your side, we are whole of market, impartial, local, friendly and are around at times that work for you.

Contact: Keith Ahmed
Company: Hello Mortgage Limited
Phone: 0800 292 2557

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Scottish Gold Explorer is raising £600k to advance its Kerry Road Deposit

For the past year and a half GreenOre Gold plc (GreenOre) has undertaken work near Gairloch in North West Scotland to assess the economic potential of the known mineralisation along the Kerry Road. Just over 9000m of drilling was conducted at a site along the old Kerry Road in the late 70’s early 80’s where a horizon rich in gold, copper and zinc was discovered. This site was abandoned due to low metal prices. A reassessment of the deposit and immediate area by GreenOre has concluded that this deposit is now of economic interest and the surrounding area, ripe for further discoveries.

The Kerry Road Deposit is located within a carbonate rich unit in the Gairloch Schist Belt (GSB). The GSB extends 15km north to south. Along this trend newly obtained Aeromag data from the British Geological Survey (BGS) has identified 9 distinct magnetic highs along the GSB with the Kerry Road Deposit clearly visible.

Some of these other magnetic high areas were investigated in 2019 revealing massive sulphide beds within the GSB. These sulphide beds appear along the same stratigraphic level as the Kerry Road deposit. One such bed located 10km south revealed 0.2 and 0.17g/t gold in grab samples from a sulphide bearing unit which disappears under the sandstone cover. Historically boulders from the vicinity ran up to 4g/t gold. Research by the BGS in 1986 identified a similar geophysical anomaly as that at Kerry Road below the sandstone at this location. This has never been drill tested. It is believed the sandstone cover is about 40m. The fact that elevated gold grades can be found over 10km away along the same unit indicates that the gold system is far bigger than just the Kerry Road Deposit. This also demonstrates the size and scale of the mineralisation event.

In 2018 GreenOre drill tested the mineralised outcrop at Kerry Road and intercepted 17m at 1g/t Au, 0.9% Cu and 0.6% Zn (including 8m at 1.8g/t Au, 1.4% Cu and 0.7% Zn). Along with the high levels of gold, copper and zinc there also appears to be elevated levels of cobalt within the bed. Cobalt values in GreenOre’s drill hole were up to 370g/t over 1m. At surface a value of 410g/t was discovered and analysis of a historic drillhole (GBH15) revealed 450g/t at 25.95m. As cobalt was never tested historically and it is anticipated higher values may exist elsewhere.

Following consultation with many experts GreenOre is confident that, if proven accurate, the historic deposit at Kerry Road is now of economic interest. GreenOre is now seeking funding to develop this deposit beginning with confirmatory drilling and a resource calculation. Metallurgical test work of the ore and prefeasibility studies will follow. During this period further investigations will continue to identify more mineralisation along trend.

If you’d like to learn more about GreenOre and its fundraise, please visit

MINEXIA is an appointed representative of Resolution Compliance Limited which is authorised and regulated by the Financial Conduct Authority (FRN: 574048).

NR Private Market is targeted exclusively at investors who are sufficiently sophisticated to understand the risks and make their own investment decisions. Investing via the NR Private Market platform does not insulate you from any of the risks associated with traditional mining and exploration investments. The value of your investment can go down as well as up and past performance is not a guide to future capital growth or rates of returns. Your Capital is at risk.

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