High Deposit Mortgage UK Homebuyers Guide

A 10% deposit - 5% mortgage deposits are possible in some cases - is typically the minimum you need for a residential mortgage. There are all sorts of products with 95%, 90% and 85% LTVs (loan-to-value), as many people struggle to save a bigger deposit. Saving a high deposit can make you stand out from other homebuyers and give you access to better deals with lower rates.

A high deposit is anything from 25% and above of the total property value. For a £100,000 property, this would be £25,000 or a 75% LTV (loan-to-value). In most cases, a 25% deposit can significantly reduce the interest rate you pay on your mortgage.

For prospective homeowners lucky enough to have a 40% deposit, this is where you'll find the best deals and interest rates. A £100,000 property would require a £40,000 deposit. With nearly half the property paid for upfront, banks and building societies experience much less risk and can offer interest rates lower than the industry average.

 As a high deposit reduces the risk for lenders, it also increases your chances of a successful mortgage application. However, other factors affect eligibility too – e.g. age, income, credit history.

Mortgage acceptance is all about the balance of risk. A bank will assess your ability to meet the capital and interest payments over the mortgage term.

The capital repayments are what make zero income and low-income applicants a risk for lenders. You may have a large lump sum as a deposit, but how will you afford the rest? If your monthly income isn’t quite enough for your desired mortgage deal, then, in order to make it more affordable, some lenders may extend the mortgage term or reduce the amount they’ll lend you.

Multiplied by a factor of 4.5, the maximum amount you could theoretically borrow with an income of £14,389 annually, would be £66,776. If lenders have a greater risk appetite and offered to multiply your income by 5.5, you could borrow up to £81,614.

It's possible to get a high deposit low income mortgage but your selection of mortgage products may be limited. A high deposit of 25% or above reduces the risk for lenders, but a low income may reduce your ability to make monthly repayments. This also limits the ceiling for borrowing to 4.5 times your income in most cases too.

It’s worth bearing in mind that, in some cases, a higher deposit can lower your LTV, meaning you borrow less and improving the chances of a successful mortgage application despite a lower income.

The bigger your deposit, the less you need to borrow, the lower your rate and the better your deal.

All of these factors go towards reducing the cost of your mortgage. By borrowing less, you lower the amount on which interest is accrued and, by securing a lower rate, less interest is applied to every pound borrowed. This means that a higher deposit can reduce the amount you pay in interest by thousands.

Compare high deposit mortgage rates with our best buys tool.

In addition to reducing your rate and the loan amount, another way a high deposit can reduce the interest you pay even further is by reducing your mortgage term. This is because the higher the deposit, the less you need to borrow from the lender. And, the less you borrow from the lender - i.e. the smaller the mortgage amount - the less time you need to pay it back and the shorter the period over which interest is applied.

Call us on 0330 433 2927 to speak to one of our expert advisers who’ll be able to find you the best mortgage with a high deposit and low LTV for your circumstances.

Most banks and mortgage lenders don’t have a minimum income threshold. However, some may specify a minimum loan amount – e.g. £5,000.

To find out if you can get a mortgage on your income, contact us on 0330 433 2927.