If you have no savings, it will be very difficult to secure a mortgage. In most cases, mortgage lenders would like to see about 20 percent of the value of the home as a down payment.
If you have no money in the bank, this is obviously impossible to do. However, there are some lenders that will actually offer a no deposit mortgage, but there are some stipulations.
When trying to get a mortgage such as this, your debt must be at a bare minimum. The reason for this is the banks want to know that the bulk of your income is available for the payment.
If you are in debt or have bad debt, this alternative is unlikely to happen.
Something else to consider is how much money you are currently earning. Ideally, the mortgage payment consumes about 25-40 percent of the household income.
In essence, a little more than a week’s salary should be expected to be tagged for the payment of the mortgage. If you have no savings and are earning only £25,000 pounds year, it would be very difficult to secure a mortgage for a decent home.
The best alternative in this type of situation may be to find some roommates and share the bills. If you are able to accumulate some savings, you will finally be able to make a respectable down payment on the home.
This also offers a bit more leverage during the offer and acceptance stages. With no money to put down, you are going to be at the mercy of the bank and the seller.
Without savings, getting a mortgage can be difficult, but not impossible. However, if this is going to work, you will need to earn a respectable salary along with having virtually no debt load at the time of application.
If that is not the case, continue renting, find roommates, and try to accumulate some savings before applying for a mortgage.
