We answer the questions ‘How much is the deposit on a property?’ and ‘When do I need to pay it?’
How much is the deposit on a property? You will need a deposit of at least 5% of the property’s value to get the mortgage. A lender will then give you 95% of the property’s value. There are important reasons to consider saving a bigger mortgage deposit.
1.) Cheaper mortgage repayments because you will receive a smaller loan and therefore the cheaper your monthly repayments.
2.) Less risky because you are less likely to fall into negative equity. Negative equity is when you owe more on your mortgage than your property is worth.
3.) Better mortgage deals because the mortgage lenders will give you more competitive mortgage deals but with lower interest deals.
4.) Better mortgage chances because lenders conduct affordability checks to work out whether you can afford the mortgage payments. Smaller deposits are less likely to pass the affordability checks.
To know how much deposit you will need in money terms, you will need to consider 2 factors:
1.) Typical property prices in your area which you can get a rough idea of on property websites. It is best to go to your local estate agents to get accurate information.
2.) How much you can afford in repayments each month. You can check this by clicking here. It is a mortgage repayment calculator.
When do I need to pay the deposit on a property?
You will have to pay a deposit on exchange of contracts a few weeks before the purchase is completed and the money is received from the mortgage lender.
We hope this answers your question ‘How much is the deposit and when do I need to pay it?’. If you are looking to buy a property in Central London, please visit Greater London Properties, Central London’s largest independent estate agent or call us on 0207 113 1066.