Some of the most common mortgage questions our advisers are asked are all about mortgage down payments and additional mortgage costs. Here’s some mortgage advice on some of the most prevalent questions below.
What is a mortgage down payment?
A mortgage down payment is the money you have saved as a house deposit. The mortgage provides the remainder of the money needed to purchase the property, which makes the mortgage down payment the same as the deposit.
How much should I save for a mortgage down payment in the UK?
The minimum down payment for a mortgage is typically 20% - but not always. Some lenders are willing to provide a mortgage with a Loan-to-Value (LTV) ratio of more than 80%, which means you may only need less than a 20% deposit.
Are there any assistance programs available for down payments?
Yes, there are mortgage down payment assistance schemes from the UK government. These schemes are subject to change, so it’s best to speak with a UK mortgage adviser for information on the latest opportunities.
What other costs should I consider besides the down payment?
Besides your mortgage down payment, you should budget for conveyancing fees, surveyor services, land tax obligations and additional mortgage costs that could be applicable. Our advisers explain each of these in detail.
Can I use gifted funds for the down payment?
You can use financial gifts to boost or even cover all of your mortgage down payment. However, some lenders might ask you to declare that this is the case. If you have concerns on this topic, it’s best to discuss it with your mortgage broker.
How does the size of my down payment affect my mortgage interest rate?
Having a larger deposit can sometimes trigger a mortgage discount and a lower interest – but not always. Nevertheless, having a larger mortgage deposit amount means you will need to borrow less and this will save you money.
Can I buy a home with no down payment?
You can buy a home with a down payment of as little as 5% in some cases, but it is quite rare to be able to buy a property with a mortgage that covers 100% of the price. There may be some schemes that help armed forces workers do this, but otherwise, it is extremely rare.
What are closing costs?
Closing costs are fees you may need to pay to complete the property transaction. Sometimes there are even closing costs for a mortgage approval, which our advisers will help you navigate.
What are conveyancing fees, and will I have to pay them?
Conveyancers are legal professionals who specialise in helping clients buy and sell property. You will need to pay conveyancing fees as part of your property purchase, which should be factored into your budget.
Can I add the cost of Stamp Duty to my mortgage?
It is possible to add your Stamp Duty expense to the loan amount. We can discuss the pros and cons of doing this in your initial consultation.
What are early repayment charges, and when must I pay them?
Early repayment charges could be payable when you repay your mortgage earlier than agreed. Sometimes, early repayment charges become owed when you overpay on your mortgage by a certain amount within 12 months. You need to be aware of these when remortgaging.
What is a mortgage arrangement fee, and can I add it to my mortgage loan?
Mortgage fees and costs can include a mortgage arrangement fee, which is a type of administration fee for arranging the loan. These fees aren’t typically significant and could be added to the loan amount.
What's the difference between a deposit and a down payment?
A house deposit and mortgage down payment are really the same thing. Your house deposit is the money saved up to help purchase a property, which becomes a mortgage down payment when the mortgage is approved and used to purchase the property.
Some of the most complicated aspects of mortgages are the figures and mortgage costs. Get clarity on your situation by booking a consultation with one of our friendly and experienced mortgage advisers by completing the form below.
