What is a mortgage deposit?

A mortgage deposit is the sum of money that you have to pay upfront when you’re buying a property. In other words, it’s part of the property’s value that isn’t covered by your mortgage.

The bigger the deposit you put down, the more equity you’ll own (which means the more of your property you’ll own outright).

Many lenders will require you to put down a certain percentage of a property’s value as a minimum deposit. For example, many lenders will only give you a mortgage for a maximum of 90% of your property’s value, meaning you have to put down the remaining 10% as a deposit. This is known as a 90% loan-to-value (LTV).

Nuts About Money tip

Lenders tend to like it when borrowers put down big deposits as it reduces their risk of a home falling into negative equity, which means the house is worth less than the mortgage – not good for a lender. This means that if you put down a bigger deposit, you’re likely to be able to access better deals.

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