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A Guide To A Minimum Mortgage Deposit

Over the years, the minimum amount that can be placed as a mortgage deposit has increased dramatically. It used to be possible to get a mortgage with no deposit at all, which is unheard of these days. Since the acceptable minimum deposit amount has increased, it is now better to put down the largest deposit possible.

The recent credit crunch has led to a lot of lenders increasing their threshold for minimum mortgage deposits to as high as 15% (and sometimes as high as 25%) before they consent to issue a mortgage. However, it is still possible to find lenders willing to issue mortgages at lower rates (5-10% mark) but the interest rates will be considerably higher. It allows some lenders to still cater to first time buyers and those who do not have that much money to spare but still want to enter the housing market.

While 5% deposits can be accepted as a minimum deposit, a 10% deposit is more attractive to lenders. If borrowers can place a 25% mortgage deposit down then borrowers are far more likely to get a mortgage loan even if they fall outside of the usual required criteria.

The purpose of a deposit is to legally bind both the buyer and the seller in the sale of the property the mortgage loan was created for. If the buyer backs out after the contracts were exchanged, the minimum mortgage deposit is lost. Plus, the solicitors will still require fees. It is important to only consider a mortgage and make a minimum mortgage deposit if the borrower is 100% certain that this is what they really want to do.

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