Before accepting your mortgage application a mortgage lender will normally require you to pay a deposit towards the mortgage loan. The size of the deposit varies with the type of mortgage product you select and the mortgage lender that you choose. Every mortgage product has a maximum ‘loan to value’ percentage defined for it which equates to the maximum amount a lender will lend for that particular product.
So for example if you need a £100,000 to purchase your property and the mortgage product you select has a maximum loan to value of 80%. This means that the mortgage lender will loan you a maximum of £80,000 towards your total mortgage and you will have to have a mortgage deposit of 20% or £20,000.
This ‘deposit’ is always a percentage of the property purchase and varies between 10 – 30 percent of the mortgage amount according to the type of mortgage product you choose.
Lenders usually want you to pay a deposit towards your mortgage loan before they will accept your application.
The size of the deposit varies according to the lender and type of mortgage you choose. And depending on the value of the property you want to buy, you may need a large deposit before a mortgage provider will accept you.