Once upon a time when a young person left school they would open a building society account and save a little money each week. So when the time came to buy a house they would arrange an appointment with the building society manager and if they were lucky, they would get a mortgage of 90% - 95% of the house value and their savings would provide the deposit.
No such financial foresight is required these days however, a buyer can see a house and buy it with a 100% mortgage and even add the legal fees and valuation fees to the mortgage.
Many people may want a 100% mortgage for a variety of reasons, for example if you are moving home and have no equity in your existing property, or if a divorce settlement leaves your ex wife or husband in the former matrimonial home and no cash in your bank account.
There are other options available too, for example a 95% mortgage with a 5% cash-back on completion would do the job just as well. Some property sellers (especially new house builders) may be prepared to pay the 5% deposit as an incentive, this however is not quite as simple as it first appears because many lenders will not accept this arrangement, they consider too risky, so you need to check with the lender first to see if its acceptable.
Another way for family members to help you get on the housing ladder is with a gifted deposit, which is where a family member simply gives you the money needed. Some lenders may have a maximum percentage of the deposit that can be gifted, plus your benefactor may be asked to sign a declaration that the money is a gift and doesn't need to be repaid.
As an alternative to using their property as security on a 100% mortgage, a family member may prefer to consider remortgaging their own property to raise a gifted deposit instead.
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