Facebook Summary: Excited to start your property search after the Eid celebrations? The deposit hurdle just got a lot smaller with the return of 98% LTV mortgages! Check out our latest guide to see how a 2% deposit could get you the keys to your first home sooner than you think.
Now that the Eid festivities have wound down and life is getting back to its usual rhythm, many of us are starting to look at our goals for the rest of the year. For a lot of people in Oldham and across the UK, that goal is finally getting onto the property ladder.
If you spent the holidays dreaming of a kitchen where you can host next year’s family feast, or a garden where the kids can play, you’ve probably also been staring at your savings account. We know that for most first-time buyers (FTBs), the biggest wall standing between you and your first home isn't the monthly payments, it’s the massive deposit.
But there is some seriously good news hitting the market right now. Recently, we’ve seen the relaunch of 98% mortgages, most notably from The Cambridge Building Society. This means you could potentially buy a home with just a 2% deposit.
At Hunter Capital, we want to make sure you have the simple, straightforward facts. Here is everything you need to know about the post-Eid property hunt and how these low-deposit deals work.
What is a 98% Mortgage?
In the mortgage world, we often talk about "LTV," which stands for Loan-to-Value. If you have a 10% deposit, you are looking for a 90% LTV mortgage.
A 98% mortgage means the lender is willing to lend you 98% of the property's purchase price, leaving you to find just the remaining 2%. To put that into perspective:
- On a £150,000 starter home, a 10% deposit is £15,000.
- With a 98% mortgage, that deposit drops to just £3,000.
That is a life-changing difference for many families who are currently paying high rents and finding it impossible to save tens of thousands of pounds.
Why is this happening now?
The property market usually sees a big "Spring Surge." People want to be moved in by summer. This year, following Eid, we are seeing a lot of pent-up demand. Lenders like The Cambridge Building Society and Santander are responding to the fact that house prices have remained relatively high, making it harder for new buyers to save up.
By offering a 2% deposit option, lenders are opening the doors to a whole new group of buyers. It’s a sign of confidence in the market and a huge helping hand for those who have a steady income but haven't been able to squirrel away a huge lump sum.
The Details: Who Can Get One?
While a 2% deposit sounds like a dream, these products do come with specific criteria. They aren't "one size fits all," so it's important to see if you fit the bill.
1. First-Time Buyers Only
Generally, these products are designed specifically to help people get their first foot on the ladder. If you’ve owned a property before, you likely won’t qualify for these specific 98% deals.
2. Property Types
Lenders can be picky about what you buy with a small deposit. For example, while some allow existing houses, they might be more cautious about new-build flats or specific types of construction. Most 98% deals focus on "standard" houses to minimize the risk for the lender.
3. Credit History
Because the lender is taking a bigger risk by lending you 98% of the value, they will want to see a very clean credit history. This means no missed mobile phone payments, no recent CCJs, and a sensible approach to existing debt.
4. Affordability
This is the big one. Even if you have the 2% deposit, you still need to prove you can afford the monthly repayments. Lenders will look closely at your salary and your outgoings. Typically, you can borrow around 4 to 4.5 times your annual income, though some lenders have special rules for high-earning professionals.
Buying in Oldham: Making Your Money Go Further
One of the reasons we love helping clients in Oldham is that your money goes a lot further here than in places like Manchester city centre or down south.
If you are looking at a 98% mortgage, a lower purchase price means an even lower deposit. In parts of Oldham, you can still find great terrace houses or apartments in the £120,000 to £140,000 range. At that price point, a 2% deposit is less than the cost of a modest second-hand car!
Using a 98% mortgage locally could mean you stop paying rent to a landlord and start building equity in your own home much sooner than you planned. You can check out some of our latest updates to see how the local market is moving.
The Pros and Cons of a 2% Deposit
We believe in being 100% honest with our clients. While these mortgages are fantastic for getting you into a home, you should consider both sides of the coin.
The Pros:
- Speed: You can buy your home years earlier than if you had to save a 10% deposit.
- Keep your savings: You can keep some of your hard-earned cash back for furniture, decorating, or an emergency fund.
- Stop Renting: Every month you pay a mortgage is a month you are investing in your own future, not someone else's.
The Cons:
- Higher Interest Rates: Generally, the less deposit you have, the higher the interest rate will be. You pay a bit of a premium for the convenience of a low deposit.
- Negative Equity Risk: If house prices were to fall slightly, because you only own 2% of the home, you could owe the bank more than the house is worth. This only really matters if you need to sell the house quickly.
- Stricter Stress Tests: Lenders will be very thorough in checking your finances to ensure you can handle the payments if rates rise.
How to Prepare for Your Property Hunt
If you’ve decided that post-Eid is the time to make your move, here are three steps to get you started:
- Check Your Credit Score: Use a free tool to see where you stand. If there are errors, get them fixed now.
- Gather Your Documents: Lenders will want to see 3 months of payslips, 3 months of bank statements, and proof of your ID. Having these ready in a folder makes the process much smoother.
- Get an Agreement in Principle (AIP): Before you start viewing houses, talk to a broker to get an AIP. This shows sellers and estate agents that you are a serious buyer who can actually get the finance.
At Hunter Capital, we work with a wide range of our lenders to find the right fit for your specific situation. We know which lenders are currently offering these 98% deals and which ones are most likely to accept your application.
FAQ: Your Questions Answered
Can I use a gifted deposit for a 98% mortgage?
Yes, most lenders are happy for the 2% deposit to be a gift from a family member. They will just need a signed letter confirming it is a gift and not a loan that needs to be repaid.
Is it better to wait and save a 5% deposit?
It depends on your rent. If you are paying £800 a month in rent, waiting a year to save an extra 3% might cost you nearly £10,000 in rent. Sometimes, getting into the market earlier with a 2% deposit is mathematically better, even if the mortgage rate is slightly higher.
Do I need a special surveyor?
No, the mortgage process is largely the same. The lender will carry out their own valuation to make sure the house is worth what you are paying. However, we always recommend getting your own independent survey for peace of mind.
Are there any fees?
Some 98% products, like the one from Santander, have come with zero product fees and even cashback to help with moving costs. Every deal is different, so we'll help you compare the total cost.
Why Talk to a Broker?
Navigating the mortgage market can feel like a maze, especially when new products like the 2% deposit mortgage launch. You might see a headline and think it’s perfect, only to find the "small print" makes it tricky for your specific job or property type.
That’s where we come in. As a dedicated mortgage brokerage, our job is to do the heavy lifting for you. We look at your income, your savings, and your goals, and then we find the lender that says "yes."
We pride ourselves on a simple brand tone: no confusing jargon, just honest advice. Whether you are looking for a standard residential mortgage or something more specific like Sharia finance, we are here to help.
Ready to Start Your Journey?
The post-Eid period is a time of new beginnings. If 2026 is the year you want to stop renting and start owning, don't let a small deposit hold you back. The return of 98% mortgages is a huge opportunity for first-time buyers in Oldham and beyond.
Let's sit down and look at the numbers together. We can help you figure out exactly how much you can borrow and which of these new low-deposit deals is right for you.
Take the first step today. Request a free consultation with our friendly team at Hunter Capital and let’s get you moving!