What deposit do I need for a mortgage?

The team at ESPC Mortgages offers advice about saving for your first house deposit and the benefits of putting down a bigger deposit.

Speak to an independent mortgage adviser

Some lenders offer mortgages with lower deposits and the situation with mortgage providers is still changing. An independent mortgage adviser can look at the mortgage market and help you find the most suitable deal for your circumstances. They can also provide advice on how to boost your deposit, bringing us to…

Boosting your first house deposit

There are ways to boost your house deposit to reach the 15% level that many lenders are asking for currently:

• Shared equity loans – there are various schemes available that contribute to your deposit in the form of a loan from the government which could be added to your own deposit, and you would get a mortgage for the rest. You should speak to an independent mortgage adviser to see if it is right for you.  
• Family assistance – it is becoming more common for family members to ‘gift’ funds that can be used towards a deposit, and family members can also act as a guarantor.
• Lifetime ISAs – these are savings accounts where the government will offer a 25% bonus on savings for first time buyers when they purchase their first home. 

Benefits of a bigger house deposit

The bigger your deposit, the smaller your loan and the lower the monthly payments.

Plus, as the deposit size increases, the interest rates available tend to come down as it is less risky for the mortgage lenders.

Paying over Home Report valuation

It is important to note that the lender will calculate the level of borrowing based on the value of the property and not the purchase price, which is often higher than the valuation. In this instance, the borrower would be expected to cover the minimum 15% deposit but also the amount paid above the property’s valuation.

As an example, if you wanted to buy a property valued at £100,000, in the present circumstances you would generally need a deposit of around £15,000. If you paid £105,000 to secure the property, you would be required to contribute the 15% deposit plus the £5,000 paid above the property’s value so a total contribution of £20,000 would be required.

ESPC Mortgages

As independent mortgage advisers, ESPC Mortgages can help with all aspects of understanding your budget, applying for a mortgage and dealing with the relevant insurance requirements. Give us a call on 0131 253 2920.

The initial consultation with an ESPC Mortgages adviser is free and without obligation. Thereafter, ESPC Mortgages charges for mortgage advice are usually £395 (£345 for first-time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED AGAINST IT.

The information contained within this website is subject to the UK regulatory regime and therefore restricted to consumers based in the UK.

The Financial Ombudsman Service is available to sort out individual complaints that clients and financial services businesses aren’t able to resolve themselves. To contact the Financial Ombudsman Service, please visit www.financial-ombudsman.org.uk.

ESPC (UK) Ltd is an Appointed Representative of Lyncombe Consultants Ltd which is authorised and regulated by the Financial Conduct Authority.