UPDATE: |’I bought my first house with a £5k deposit – I never thought it was possible’ News

Rachelle O’Brien, 35, from Middleton had almost given up hope of owning her own home when she came across a life-changing mortgage deal

Getting a foot on the property ladder is far from easy, especially when you are buying alone. With many young people forced to rent, it becomes even more difficult to save for a deposit.

A new survey by West Brom Building Society found that among more than 2,000 private renters across the UK, more than half say that high house prices are their biggest barrier to owning a home.

Two-fifths said the rising cost of living is making it hard to save for a deposit, while a quarter said high mortgage rates are another discouraging factor.

First-time buyer Rachelle O’Brien, 35, was still living with her parents and had largely given up hope of owning her own home before she entered the market.

She worked as a contractor, managing installation projects for a telecoms and broadband provider, and feared that her employment status would scupper her chances of getting approved for a mortgage.

Although she has worked hard to get some savings behind her, Rachelle was reluctant to tie all of that up in a property, as she wanted to ensure she could cover herself for any dry periods where work became more scarce.

Rachelle thought she would have to continue living at her parents’ home for another four or five years to amass a big enough deposit to afford a house – until she came across a new mortgage deal.

Yorkshire Building Society launched their £5k Deposit Mortgage at the end of March 2024 to enable first-time buyers across England, Scotland or Wales with a £5,000 deposit to purchase a property valued at up to £500,000.

For someone buying a typical first-time buyer property priced at £200,000, a £5,000 deposit would equate to 2.5 percent of the purchase price, with the remaining 97.5 percent being borrowed as a mortgage.

“I jumped at the chance as soon as I saw this product advertised,” Rachelle said. “But I still didn’t think I’d get approval because I work as a contractor and my work arrangements renew every three-to-six months.

“In fact, I felt so sure this would hold me back that I had never even tried applying for a mortgage before, even though I really wanted to own my own home.

“Even if I’d managed to save up the kind of deposit you need for a standard mortgage these days, I wouldn’t have been in a position to tie it all up in a property because of my circumstances, but the £5k requirement made it doable.”

With help from the deposit mortgage deal, Rachelle bought a two-bed house in Middleton last year for £170,000 with just a £5k deposit.

With a typical mortgage, she would have needed to have saved up at least £8,500 and more likely £17,000, plus other purchase costs including solicitor’s fees.

Rachelle and her beloved Cavalier spaniel Boo are now enjoying putting their feet up in their cosy new house.

“It’s changed my life – it really means a lot to me to have my own front door for the first time,” Rachelle said.

“I’m now living in my own place, with my dog and my own front and back gardens; my friends live on the same estate and both parents are not too far away so they visit regularly.

“Everyone tells me it’s a real achievement to have my own house and something for my future. It’s been really exciting to decorate and buy new furniture, and just make the place my own.”

Rachelle added: “The Yorkshire Building Society team were so helpful, the whole process ran really smoothly and I even got a welcome hamper from the Society the day I moved into my new home – the Yorkshire tea and treats, as well as some lovely cups were appreciated on moving-in day.”

Rachelle says she is now still able to save money. “My monthly mortgage payment is considerably less than I would have to pay to rent this kind of house and it feels great not forking out for something every month and getting nothing for it,” she said.

“Now I not only have a home but an investment in my future as well – I can’t believe I’ve been living in my new home for almost a year.”

More than 800 people have been helped onto the property ladder in the last year since the £5,000 deposit mortgage deal was launched, Yorkshire Building Society says.

The society said some people have ‘cried with happiness’ on the phone when they were told a decision-in-principle had been agreed.

They said customers have also said the product has not only enabled them to get on the housing ladder faster, but also to make other life plans such as getting married and starting a family.

Speaking as the deal passed its first birthday, Ben Merritt, director of mortgages at Yorkshire Building Society, said: “Launching this product and seeing the effect it has had has been so humbling and has really brought home to us the fact what we do is not just about bricks and mortar.”