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Get the best deals with a mortgages with a deposit

When buying your home, you will be able to choose from a number of fixed-rate mortgages or discount rate mortgages that are available on the market. Most mortgages require a deposit. The amount of your deposit you will determine the type of mortgage you will be able to get.

The bigger your deposit, the better deal you should be able to get. Since the financial crisis began, mortgage lenders have had to be stricter on their lending criteria, making it difficult for first-time buyers to get their first property. Mortgages require a deposit of between 5% and 40%. The more you have as a deposit, then the more deals that will be available to you.

Your deposit will lessen the ‘loan to value’ or LTV required for your mortgage. For example, if your house is worth £100,000 and your mortgage is £80,000, then your LTV is 80%. Lower LTVs will also attract a lower average interest rate than high LTVs. The risk of high LTVs is that your house is worth less than the amount you have to pay on your mortgage, referred to as negative equity.

Lenders now, more than ever, have to be careful about their lending criteria to ensure there is no repeat of the current financial crisis. Your credit history will be checked, and you will need to ensure you can make your repayments on your mortgage.

For some, even a hefty deposit is not easy to achieve. There are deals, often by housing developers, which will help you buy your home. Offers may include providing no deposit, offering you an unsecured loan or entering into a shared equity scheme to make it easier to buy your home.

It pays to consider all financial decisions carefully. If you are unsure what is best for your circumstances, then you may benefit speaking to an Independent Financial Advisor.

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