A mortgage deposit is the amount you are contributing towards the purchase of the house. It is does not factor in moving, legal or tax costs; it is solely the difference between the purchase price and the mortgage amount. For example, if you were buying at £100,000 and taking a £90,000 mortgage – the deposit would be £10,000.
Frequently asked questions on Deposits
Q. What is the minimum amount of mortgage deposit I need to put down to buy a property?
A. Normally 5% of the purchase price. However Right-to-Buy mortgages do not always require a deposit. On Shared Ownership the 5% will be based on the share of the property you are buying, for example the property is worth £100,000, you are buying a 25% share i.e. £25,000 then the deposit will be £1,250. On buy to let mortgages the minimum deposit is 15%.
Q. I’m buying a property with a partner and they are providing all the deposit is this ok?
A. Yes.
Q. I’m buying a property with a partner. The partner will live in the property but not go on the mortgage and they are providing all the deposit is this ok?
A. It depends on the lender you should seek professional mortgage help.
Q. How can I make my Mortgage deposit go further?
A. There are schemes such as Help to Buy and Shared Ownership where the deposit requirements are less.
Q. My parents are looking ‘gift’ money to me to help with my Mortgage deposit is this ok?
A. Yes. However, if they intend to live in the property too then most lender will not like this so you should seek professional mortgage help.
Q. Does the deposit gift donor have to be related to me?
A. There are certain lenders that will allow ‘gifts’ from friends.
Q. How many people can make gifts towards a purchase?
A. There is no set number but if there are more than four donors the lender will look closely at the transaction and question whether the property is to be owned by a syndicate rather than an individual.
Q. I don’t have any my deposit yet can I apply for a mortgage?
A. In theory you may not need to evidence your deposit until just before the house purchase concludes. However, at any point during the mortgage application the Lender may ask you to produce evidence of the deposit and unless it’s from a simultaneous property sale they are likely to decline your case. Furthermore, the vendor’s estate agent and the solicitors are also likely to ask you to produce deposit documentation.
Q. My Mortgage deposit is coming from another country via a money exchange bureau is that acceptable?
A. Yes, but you need to seek to a mortgage professional.
Q. My Mortgage deposit is coming from a country outside the EU is that acceptable?
A. Yes, but you need to seek to a mortgage professional.
Niche Advice can offer appropriate advice on mortgage deposits. To find out more complete the Contact Form on our website or call T: 020 7993 2044.
Author: Payam Azadi
Payam Azadi is a partner at Niche Advice who are whole of the market Independent Mortgage Brokers. His role is very much focused on Property financing both on residential and commercial lines. To get in contact with him please click here.
