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The YouMove First Time Buyer Guide
How much deposit?
This is a question that's much less in the hands of the buyer now than it used to be. Gone are the days of 100% plus mortgages. Most lenders now will not lend more than 90%.
Of course the more of a deposit you can put down the less your mortgage will cost you. Over the lifetime of a mortgage the savings, in terms of interest, can be very significant. If you are in a position to increase your deposit use our mortgage calculator to see how this could affect your payments.
Another reason for putting down a larger deposit is that banks reserve their better deals for borrowers with larger deposits.
Conversely, if you can only put down a small deposit you may have to pay a Higher Lending Charge.
A Higher Lending Charge pays for insurance to protect the lender in the event that a property in negative equity (ie, it is worth less than the outstanding mortgage) is repossessed. It will cover the shortfall between the sale price of the property and the outstanding mortgage.
Typically Higher Lending Charges are required on mortgages with a loan to value (LTV) of 90% or more, though this will vary. The higher your LTV the more expensive the charge.
Typically Higher Lending Charges are required on mortgages with a loan to value (LTV) of 90% or more, though this will vary. The higher your LTV the more expensive the charge.
