Mortgage Deposits

What is a deposit?

A deposit is the amount of money that you put down on a house purchase. So, if I take out a £100,000 mortgage on a £125,000 house, my deposit needs to be £25,000.

Can I get a mortgage for more than the value of my home?

You can get a mortgage for more than the value of your home, but the whole thing will not really be your mortgage. There will be a mortgage up to the value of your home, and then a lender will lend you the rest in the form of a personal loan. You may want one of these mortgages in order to cover additional home buying costs, such as stamp GT, legal fees, survey fees. Or you may want it to consolidate other debts that you owe, such as credit cards or personal loans, which will then be at the lower mortgage interest rate. However, if you do take out a mortgage for more than the value of your home, it may be that you have a dip in your house's value, and you find yourself with a debt that's bigger than your house is worth.

Do I need a deposit in order to get a mortgage?

You don't need a deposit in order to get a mortgage. You can take a mortgage for up to a hundred percent of the property's value. However, the bigger deposit that you have the better deal you're going to get on the mortgage interest rate.

How will my deposit affect my mortgage?

Your deposit will affect your mortgage in two different ways. The bigger your deposit, the less that you will have to pay back in monthly repayments on your loan. Also, the bigger your deposit, the more money a lender will lend you. On top of this, if you have a big deposit, you will generally get a better deal on your mortgage interest rate. That is because the lender is taking on less risk and you're taking on more risk. If you have a deposit for 5% of the value of the house then the lender is only worried about the risk of 5% of the value of the house. If you have a deposit for only 1%, the lender is worried about the risk on 9% of that value.

I don't have a deposit - is it worth borrowing one from somewhere?

It may be worth borrowing a deposit from somewhere but you'll have to be able to pay that back at the same time as you pay back your mortgage. If you are going to borrow a deposit, it's best to try to borrow it from a family member or a friend. It's more flexible as to how you pay that deposit back and if you have any problems, they may understand and help you out.