Looking for a mortgage? Make sure you've got a big deposit

Can you still get a mortgage with just a 5% deposit? Such deals are certainly a lot thinner on the ground after a string of banks and building societies reined in their lending in response to the credit crunch. On Thursday, the Woolwich became the latest big name to increase the minimum deposit it demands from new borrowers to 10%. The change means a typical first-time buyer in London will have to stump up almost £26,000 to obtain one of its home loans. The Woolwich says: "Set against the background of a continuously changing market, we feel it is prudent from a customer perspective to limit the maximum loan-to-value (LTV) to 90%."

Last week, Nationwide reduced its maximum LTV from 95% to 90% on all but two of its mortgage products. Cheltenham & Gloucester, Alliance & Leicester and Britannia are among other lenders to have capped their maximum loans at 90%.

David Hollingworth at mortgage broker London & Country says Halifax, Abbey, Royal Bank of Scotland/NatWest, Bradford & Bingley and Northern Rock are some of the high street players that still offer mortgages up to 95%, though they will often charge higher rates, and you may well face a "higher lending charge".

Above 95%, there is very little around indeed. Bank of Ireland Mortgages's 1st Start deal is still available. This is a joint mortgage using the income of a parent to enhance the borrowing capacity of the buyer up to 100% of the purchase price. However, the parent cannot.....continued below

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be older than 60 at the time the application is made.

Melanie Bien at broker Savills Private Finance says the 90% limit imposed by many lenders clearly makes it harder for first-time buyers to get on the property ladder. "Only those with significant savings or parents who can help will be able to do so."

She adds that those wanting to borrow 95% can get a two-year fix from Skipton Building Society at 5.79% with a £799 fee, or a three-year fix from the Post Office at 5.89% with a £599 fee. Halifax will still lend up to 97% to those buyers who have, or open, a current account with the bank and agree to have their salary paid in every month. Rates start at 6.14% for a five-year fix with no fee and a choice of refunded valuation or no conveyancing charge.

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