High deposit mortgages guide
You don’t have to deposit a lot to get a mortgage these days. However, there are many benefits to saving as much money as you can and putting as much down as possible.
What is a large mortgage deposit?
High mortgage deposits are usually considered to be anything between 25% and beyond. This is where the most competitive rates begin.
The minimum deposit that high-street mortgage brokers will request is usually 5% of the property’s loan to value. There are limited options and some deals that may not be available. In these cases, however, there might be a lower interest rate.
A buyer can, if they are able, put down a larger deposit. This could be money from the sale or accumulation of assets. If you’re able to, it can pay off with reduced interest rates and/or shorter loan terms.
25% deposit
Here is where the most favourable mortgage rates are. These rates tend to go down as long as you meet all other eligibility requirements.
A 25% deposit will make it less likely that a mortgage lender will reject your application because you have enough for a low deposit mortgage. This will allow you to select from a wider range of mortgage products than someone with a 10% deposit. You may even be eligible for a favourable mortgage, even if your credit score is not good.
50% deposit
A small percentage of mortgage deals will need to deposit 50%. However, this is a realistic requirement. If you are able to raise the money, you may be able to access the best interest rates available, provided you meet the eligibility requirements.
A deposit of this amount will increase your chances of getting a great deal, even if you have bad credit or an unusual property type.
What is a large mortgage deposit?
High mortgage deposits are usually determined to be 25 % or more. This is the place where you can get really competitive rates and lower monthly repayments.
The minimum deposit that high-street lenders will request is usually 5% of the property’s value. There are limited options and some deals that may not be available. In these cases, however, there might be a lower interest rate.
A buyer can, if they are able, put down a larger deposit. This could be money from the sale or accumulation of assets. If you’re able to, it can pay off with reduced interest rates and/or shorter loan terms.
Can a large deposit affect my mortgage repayments?
As you can borrow less, a larger deposit may result in a lower mortgage. This is great news for applicants who are looking for lower monthly payments.
This could improve your chances of getting approved for a mortgage because smaller repayments may be considered more affordable for those with lower incomes.
What if I have poor credit?
Mortgage deposits if you have bad credit are generally larger and recommended to be 20-25%. However, this does not guarantee that you will be accepted for a mortgage. There are other affordability factors that can be taken into consideration. The amount of additional deposit that you will need depends on your credit score.
Lenders will take into account:
- The severity of bad credit
- You have a number of credit cards
- When was it last?
- It doesn’t matter if the issue has been resolved.
It is best to seek out help from an expert on adverse credit. You can also check your credit history to determine if you have any financial problems.
We can help you connect to a specialist mortgage broker if you are worried about your credit, or just want some reassurance.
What happens if I have a large deposit but a low income?
You can still get a mortgage. Lenders need to assess a low-income, high-deposit application. They may also look at other expenses such as debts or property repairs that you might have in the future.
You may be able to help your cause if there are other sources of capital, in addition to your basic salary. Remember that…
- Mortgage lenders will accept benefits from declarable income
- Many lenders offer mortgages that include bonuses, commissions and overtime.
- You can declare your side work as well as your main earnings.
- You can also declare stocks, shares, and pension funds
- Assets are also available
- Cash savings are also possible
This will give a lender the confidence that you can pay your mortgage on time and avoid accumulating debt.
What is the minimum deposit required for self-employed workers?
It is not often. If you have additional risk factors due to your employment, the deposit requirements for self-employed customers are higher. If you are unable to provide proof of income for at least two years, you may need to borrow additional money from a specialist mortgage lender.
Did You Know An Online Mortgage Advisor Broker has access to more deals that any other comparison site. Get started to discover more options and increase your chances of getting approved for a mortgage.
Save money for a bigger deposit
Saving for a first buyer can be difficult, especially if there is a large deposit to save. If you find it hard to save enough for the deposit, there are many mortgage products and options that may be able to help.
Government assistance
Help To Buy was created in March 2013 to assist anyone who is having difficulty saving a deposit to buy their first home. Help to Buy offered two government programs that could be useful to those who wanted to save a substantial deposit on a property. However, Help to Buy ISAs have been discontinued.
Help To Buy Equity Loans are still possible and can be used by someone who has a deposit to buy a mortgage or is willing to borrow it as an interest-free loan.
The buyer must first deposit 5% of the property’s value. After that, the government can provide up to 20% in loan funds.
The buyer will then be able to access more attractive mortgage rates from participating lenders. This scheme gives banks and building societies the confidence to lend larger mortgages to buyers due to the combined deposit of as much as 25%.
Parental support
Parents are increasingly helping their children to get on the property ladder by helping them to raise a larger deposit than what they could do on their own.
Because it can be difficult to save a large amount of money for a mortgage, many parents choose to use their equity or their own money to speed up the process. It also means their children won’t have to live with them for the rest of their lives.
Parents and loved ones can assist in a variety of ways.
Gifted deposits
To raise large deposits for mortgages, some lenders will accept gift deposits from friends and family such as parents. It is a good idea to have a gift deposit letter completed by anyone who is giving you money. Sometimes lenders will also require this form.
This is to confirm that they do not have any interest in the property. They will not make arrangements to repay the money in the future.
Equity release
Equity release allows homeowners to withdraw funds. There are rarely any repayments and the loan can be repaid after the homeowner dies or is placed in permanent care. This could be used by a parent to generate funds for their children’s mortgage deposit deposits.
A Springboard mortgage
A Springboard mortgage allows family members to use part or all of their savings as security for your mortgage. They will be asked to deposit the money (typically 10% of the property’s value) into a secured account.
If you pay your monthly repayments on time, the money will be returned to you in three years with interest.
This option is appealing to parents as well as first-time buyers. It gives you the security of knowing the money will be returned.
Is there a way to calculate my large deposit mortgage?
A mortgage calculator will give you an estimate of the amount that an applicant can borrow, based on your financial and personal circumstances.
It can also provide a guideline as to how much a borrower will repay each month, based on the applicant’s deposit size, mortgage rate, and other factors. Each lender will use different criteria to determine affordability.
These could be:
- Deposit size
- Deposit source
- Income
- Income source
- Property type
- Equity
There may be a difference in the amount you can borrow. If you get a quote and are unhappy with it, keep that in mind.
To fully understand the amount of deposit required for a mortgage, you need to receive the right advice.
Our advisors can help you determine how much deposit you might need by taking your information.
High deposit mortgages: Why you need to speak with an expert
Before you apply for a mortgage, we recommend that you consult a mortgage advisor. A mortgage advisor can help you relax, even if it is overwhelming.
A mortgage advisor can help you find the right lender for you and guide you through the application process.
Our advisors are experts who can determine how much deposit you will need. They are more than willing to assist you without any obligation, charge or marking on your credit rating.
We can provide the best advice possible
We can assure you that our brokers have the experience you need to help you find the right mortgage for you, regardless of whether it is a large deposit mortgage or another product that suits you better.
How do they know? We train them. Each person must complete a 12-module LIBF-accredited training course. They can only be licensed if they show that they understand what they are doing.
We can help you, whether you feel lost by your lender or are unsure what to do next.
Did You Know A broker can help you access 30% more mortgage markets. Get started with a Loan Corp today to discover how much you could save and unlock even more deals.