A deposit is the amount of money that you will be required to provide towards the purchase of a property, with the balance made up from mortgage finance. Building a deposit isn’t easy these days but just now it is very difficult for you to get a mortgage without one!
A house deposit is something you should save for and gather before you start thinking about which property you want to buy. Having said that, if this is a real problem there are other options featured in our guide to building a deposit(see below). These days parents and grandparents help out a great deal of first timers.
The size of your house deposit may affect the interest rate you pay for some mortgage packages – the more you put down as a mortgage deposit, the lower the rate of interest you may be charged.
A typical deposit would be up to 25% per cent of the price of the property. So, for instance, if you were required to provide a 20 per cent deposit and the purchase price was £150,000 you would need to put down a £30,000 deposit. A very large mortgage would attract additional higher lending charges. These days, many parents make gifts to boost the size of the mortgage deposit. We cover that in more depth in our ‘How Parents can Help’ section.
Find out more about how to build a deposit – see our guide: