High Deposit Mortgages
Find out what counts as a large deposit, and what impacts having low income or no employment have on them.
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If you’re among the lucky minority who has a large mortgage deposit ready to go, you’ll need to know how that impacts your borrowing options.
In this article we’ll look at what counts as a large deposit, how the size of your deposit can impact the interest rates you’ll get, and how a broker can help you secure the best deal.
What is considered a large deposit for a mortgage?
Anything over around 25% is considered a large deposit. This is the threshold at which your high deposit starts to open up better deals and more competitive rates.
The average minimum deposit requirement for a mortgage in the UK is 10%, although it’s sometimes possible to get a mortgage with a 5% deposit, or with none at all, depending on your other circumstances and the type of mortgage.
Having a 25% deposit puts you in a strong position for buying a house and is the level where you’ll start to notice preferential interest rates coming in, meaning your mortgage will cost you less both on a monthly basis and over its full term. 25% deposits are less common for first time buyers, but it may be that you’ve been able to include something like a gifted deposit or an inheritance to boost your borrowing power.
50% deposits are more common for people selling homes with a lot of equity, who’ve been paying off an existing mortgage for a while and have seen the value of their home increase. With a 50% deposit you’ll be seen as low risk for lenders, so will normally get the best available rates, and other potential risk factors such as bad credit may carry less significance.
If you’re in the fortunate position to have a 75% deposit – perhaps because you’re selling a family home or downsizing, then you shouldn’t have too much difficulty securing a mortgage. It might however be worth getting some financial advice just to be sure that putting that amount of cash towards a house purchase is the best way of investing it for you.
What’s the biggest deposit you can put on a house?
Technically speaking you can have as large a deposit as you want – 100% and you become a cash buyer! You may find though that having a very large deposit and only needing a small loan will put some lenders off, as it won’t make it worth their while. While a handful of lenders have no limits, most have a minimum loan value, typically between £25,000 and £50,000.
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Is it easier to get a mortgage with a large deposit?
Having a high deposit is certainly going to be a plus point in your mortgage application, but lenders will look at a combination of factors to assess your eligibility, including your credit history, age, and other things such as the type of property you’re buying.
The other key thing lenders will want to assess is affordability. Regardless of the size of your deposit, your lender will want to make sure that you can afford your monthly repayments, so they’ll look at your annual salary and set a cap on lending based on that. On average the maximum you can borrow on a mortgage is 4.5 times your salary, but it is possible to get a 5.5 times salary mortgage, or sometimes even higher, depending on your circumstances. Lenders will also consider other credit commitments as part of their affordability calculations, such as credit cards, loans, dependents and hire purchase.
While a bigger deposit doesn’t mean you can afford to borrow more, as this is capped based on your income, it can mean that together with your loan, you can afford to buy a higher value property.
You’ll notice that many lenders will talk about your deposit in terms of your loan to value ratio, or LTV. Your LTV is the size of the loan you want relative to the total value of the property, so a higher deposit means a lower LTV. A deposit of £50,000 for example on a property worth £200,000 equates to an LTV of 75%.
If you’re not sure what your LTV is you can work it out in our simple calculator. Just enter the value of your property and the size of the mortgage you’re looking for and we’ll do the rest.
This calculator will tell you what your loan-to-value (LTV) ratio is, based on the property's value, your deposit/equity and the amount you're borrowing.
Your LTV is
This means that most mortgage providers will consider your deposit amount to be more than satisfactory, but speaking to a broker is still recommended to ensure you get the best deal.
This means you’re likely to meet the deposit requirements at most lenders, but since many reserve their best rates for those with higher deposits, speaking to a broker is recommended.
Many mainstream mortgage providers would consider this high and be reluctant to lend. Applying through a mortgage broker may be necessary to find a specialist low deposit mortgage lender.
LTVs have a direct impact on the rates available to you - speak to a mortgage broker and find out how to get the best deal based on your ratio.
How we got Jason's mortgage approved!
"I had saved for a deposit for what seemed like forever but feel down at the first hurdle when it came to applying for a mortgage on the cottage I had my eye on. I was applying on my own, and the bank I approached said my income simply didn’t stretch far enough. I refused to give up and decided to get a second option. I turned to Google in search of a good mortgage broker and came across Online Mortgage Advisor’s website. I used their matching service and was quickly introduced to a broker named Gareth, who clearly knew his stuff. Gareth explained to me that the lender I approached only offered mortgages based on 4.5 times income, but one of his lender contacts was willing to approve me for the same mortgage amount because they stretch to 5.5 times salary. Mortgage approval was a pleasant surprise!"
How to get a better mortgage deal with a large deposit
Just because you have a high deposit doesn’t mean that finding a mortgage will be easy and in fact if you go in over confident, without doing the groundwork, you risk having your mortgage application declined. Luckily there are a few things you can do beforehand to make sure you get the best possible deal.
Get matched with a broker experienced in high deposit mortgages
The typical products and rates advertised by lenders may not be applicable for larger deposits, and many have exclusive rates or more room for negotiation when you have a large chunk of money to put down. Some of these preferential rates may be hard to find without an intermediary, so it pays to find a broker who specialises in large deposit mortgages.
Make an online enquiry now and we can match you with an advisor with just the right expertise for your circumstances.
Compare rates at different LTVs
At this stage it’s worth taking some time with your broker to compare interest rates based on how much deposit you have now and where the next threshold would be for you to get better interest rates.
For example, perhaps you currently have an LTV of 72% but with a little more saving or work on maximising your deposit you could bring it down to 70%. There may be lenders who offer a more competitive rate at this level of deposit, which would make it worthwhile spending a little more time saving. Knowledge is power here, and a broker can give you that.
Understand your credit history
While a large deposit can open up better rates, other risk factors such as your credit history could mean you don’t benefit as you should from your savings. It’s still possible to get a bad credit mortgage, but to get the very best rates with a large deposit you will ideally have a clean credit history.
Get copies of your credit reports in advance to make sure you know where you stand. Correct any errors now and address any issues up front to stop them impacting the mortgage application process.
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How does a large deposit affect mortgage repayments?
Increasing the size of your deposit can mean that the amount you need to borrow is reduced, bringing down your monthly repayments too. This is a positive for lenders, especially if you’re on a low income, as it makes your mortgage more affordable.
Use our mortgage repayment calculator below to compare what your mortgage repayments might look like under different terms and rates.
Mortgage Repayment Calculator
Our mortgage repayment calculator can tell you how much your mortgage will cost you each month and overall. Enter the amount you’re borrowing, the term length and interest rate, and our calculator will do the rest.
Total amount paid at end of term:
Get started with an expert broker to find out how much they could help you save on your mortgage repayments.
Can you get a mortgage with no job but a large deposit?
Having a large deposit can definitely help you to get a mortgage if you have a low income, but getting a mortgage with no job at all can be difficult. The first thing to do is to consider any other sources of income, as a job isn’t the only income that counts for mortgage purposes. It is possible to use certain benefits as income for a mortgage for example, or income from pensions, investments, rental income or maintenance payments.
Speak to your broker about your situation for a better idea of which lenders might be able to offer you a mortgage with no job but a large deposit.
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Can you get a mortgage with bad credit if you have a large deposit?
Mortgage lending always comes down to risk, and while bad credit is seen as a risk factor, some of this risk can definitely be mitigated by offering a larger deposit. The impact of your bad credit will also depend on the details of the credit issue – the type of problem, whether it was something serious like a CCJ or just one missed payment, how much money was involved and how long ago it took place.
Get matched with a broker experienced in dealing with large deposits
While you might think that having a large deposit means it will be easy to secure a mortgage, that’s unfortunately not always the case as so many other factors come into play. You could also be faced with significantly more research, as your high deposit will open up a lot of options and exclusive rate deals. Don’t worry though, a broker will do all of this for you, freeing up your valuable time.
You don’t even need to spend hours finding the best high deposit mortgage broker, as our free broker matching service does the hard work here for you too. Give us a call on 0808 189 2301 or make an online enquiry and we’ll assess your needs and arrange a chat for you with an advisor with specific experience in securing large deposit mortgages. There’s no obligation so you’ve got nothing to lose.
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