The bigger the mortgage deposit the better!
Acceptable mortgage deposit size is now much larger than it was few
years ago, when you could get a mortgage without any deposit at all.
The credit crunch has forced virtually all lenders from issuing
mortgages with a deposit of less than 15%, with some mortgage lenders
still asking for a deposit of 25% before they will agree the mortgage,
however a 10% deposit can still be regarded as sufficient by at least
one lender. The interest rate may be a little high compared to what
was available a year ago, but at least it means some first time buyers
can now stand a better chance of entering the market, and that cant be
a bad thing.
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quote and help and advice - from a mortgage broker
regulated by the Financial Conduct Authority
The usual minimum mortgage deposit that is accepted by most lenders is
5% . A deposit of 10%will attract more lenders into the frame and have the added advantage of removing the need to pay for a Higher Lending Charge. Higher Lending Charge (also previously known as mortgage indemnity, maximum advance fee, high loan to value fee, scheme for maximum advance, etc.) is an insurance that the lender takes out to cover the risk of lending in excess of
75% of the property's purchase price
The two main points that you have to be aware of is that the fee is
paid by you, not them (though you can usually add it to the overall
mortgage loan if you are short of cash), and that it is designed to
protect the lender not the borrower.
This means that if you were unfortunate enough to build up a high
level of mortgage arrears and end up getting repossessed, although the
indemnity insurance would cover any loss made by the lender, the
indemnity company would be actively pursuing you to reimburse them for
the amount they have had to pay out.
The other main point to bear in mind about a mortgage deposit is that
it is payable to your solicitor at exchange of contracts and legally
binds the buyer and seller to complete the sale.
If you try and back out after exchange of contracts you will lose your
mortgage deposit and still have to pay your solicitors costs.
Furthermore, if the vendors try to back out they can be sued by you
and will still have to pay solicitors costs. This is why after
exchange of contracts, everyone breathes a sigh of relief because up
to this point absolutely nothing is legally binding.
The final point on deposits is that if a borrower can put down a
mortgage deposit of at least 25% then the decision on whether to lend,
and how much to lend, should fall within the mandate of the local
branch manager. Putting it another way, he can normally agree the
mortgage even if it falls outside normal lending criteria.
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This site contains a summary of the information relating to the
products and is not intended to promote any specific mortgage or
insurance product or provide mortgage or insurance advice. It is for
information purposes only.