What’s a mortgage deposit?
If you require a mortgage to purchase a home, it’s likely that you’ll need to put down a deposit. This is a lump sum that you pay upfront, letting you own part of the property outright. The rest of the agreed sale price can be paid by a mortgage, which is a loan that can be repaid in instalments. A deposit can give the seller reassurance that you’re serious about purchasing the property.
The deposit amount that you’ll have to pay depends on a number of factors. The larger your deposit, the better a deal you may get on your mortgage – this is because lenders are more likely to believe that you’ll meet your mortgage repayments.
What’s Loan to value (LTV)?
Your LTV is the percentage of your property that is mortgaged, compared the overall value of your home. The lower your LTV, the larger the proportion that you already own. On the other hand, the higher your LTV, the less of the property that is already yours – this makes you a riskier prospect to the lender, and could mean that you’ll get a worse deal on a mortgage than if you had a lower LTV.
Before applying for a mortgage
If you don’t have enough funds for a mortgage deposit, you may want to consider saving for it before you agree to purchase a home. You can also check your Equifax Credit Report & Score in preparation for applying for a mortgage. It’s free for the first 30 days, then £14.95 monthly, and provides you with your credit history as well as an indication of how creditworthy a lender may find you, so that you can see if you need to take any steps to get credit-ready and improve your credit rating before applying for a mortgage.
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- Stamp Duty Land Tax (SDLT) explained
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- What is a joint mortgage?
- Offset mortgages explained
- What is a mortgage in principle?
- Purchasing property with friends
- Costs and fees to consider when you’re buying a home
- Getting a no deposit mortgage with bad credit
- Do you have Right to Buy on your council home?
- Saving for a mortgage deposit
- What is a mortgage interview?
- How do credit scores affect mortgages?
- What to consider when applying for a mortgage if you’re self-employed
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- Types of home improvement loans
- What happens to a mortgage after death?
- Getting credit-ready before applying for a mortgage
- How do mortgage applications work?
- Selling property – what to ask estate agents
- Selling property – estate agents vs doing it yourself
- Buying a leasehold property
- Help to Buy: equity loan
- London Help to Buy
- Mortgages for self build and custom build homes
- Help to Buy: Shared Ownership
- What is a Help to Buy: ISA?
- Resources for first-time buyers
- Buy-to-let mortgages explained
- What is remortgaging?
- How mortgage repayments work
- Understanding Mortgages
- Types of Mortgages
- Mortgage rates & decision
- Homebuyer's guide