Mortgage Deposit Calculator UK

Once you know what you can borrow and the repayments you can afford, your next task is to compare mortgages rates. You’ll have the choice of fixed rate mortgages, where your interest rate and monthly payment remain the same for the fixed period. Alternatively, you can choose a variable rate mortgage that tracks the Bank of England Base Rate. With this type of mortgage, your monthly payments can go up or down slightly each month. See our best buys to compare first-time buyer mortgage rates on the market now.

If the mortgage borrowing calculator gives you an amount that’s too low to buy the home you want, you may want to consider some other options.

• Save for a bigger deposit – if you can only get a mortgage covering up to 80% of the cost of the property you want, you’ll need to save at least a 20% deposit
• Ask the Bank of Mum and Dad – if your parents are in a situation where they’re able to gift you money, then they may be able to contribute to your deposit and help you access better deals

Having a bad credit score doesn’t necessarily mean you won’t get a mortgage, but you may have to pay a higher deposit. While it varies from lender to lender, you may have to find a deposit of at least 25%. Each lender has its own criteria for calculating and assessing mortgage applications to determine the level of risk and how much they’d be willing to lend.

They’ll want to look at:

• The type of adverse credit you have and how much you owe
• When the bad credit was registered
• If the debt is settled
• The circumstances surrounding or leading to the debt – e.g. divorce, death of a partner, loss of job, illness, etc.
• Your credit history
• The value of the property you want to buy
• Your income and employment type – whether retired, self-employed, employed or a contractor
• Your age

Mortgage interest is calculated as a percentage of what you borrow. The deposit is excluded from the calculation. The interest is paid on the amount outstanding over the term of the mortgage.

Most residential mortgages are repayment mortgages. This means you’ll be paying back some of the original amount you borrowed, plus paying the interest each month. If you make all your payments, you’ll have 100% equity in the property by the end of the mortgage term. However, most people remortgage onto a new deal when they come to the end of their introductory rate period as this is typically cheaper than going onto the lender’s SVR.

The longer the mortgage term, the more interest you’ll have to pay overall. For instance, if you take out a mortgage of £200,000, you’ll pay less interest over a 20 year mortgage than a 30 year mortgage.

There are also interest-only mortgages where you only make interest payments each month and don’t make any monthly capital repayments. This means you’ll still owe the original amount you initially borrowed at the start of your mortgage, until you pay it back via a repayment vehicle when you reach the end of your mortgage term or remortgage onto a new deal.

Buying a house without a deposit in the UK, also known as a 100% mortgage, is possible but it works differently from a normal mortgage. This type of mortgage allows you to borrow the total cost of the property without putting down a traditional deposit.

No deposit or 100% mortgages are also known as Family Springboard or Family Assist mortgages. Many lenders have different versions of these products but they essentially work the same way: a family member of the borrower puts money into an interest-earning linked savings account with the lender or has a charge with no interest put on their property.

The money or equity acts as a placeholder deposit until the borrower has repaid a certain amount of the mortgage. The family member then receives their money back or has the amount taken off their property. The main risk here is that the family member could lose their savings or have their property repossessed should the borrower fail to meet their mortgage repayments.

There’s also a slightly different kind of no deposit mortgage called the Skipton Track Record Mortgage. Essentially, the lender uses your track record of making rent payments on time and in full for at least a year when considering your application. They do this instead of taking a deposit as security. When assessing how much you can borrow, the lender will look at your income and what you’ve been paying in rent. They’ll apply their own calculations and take the lower amount of these 2 to determine your maximum borrowing at 100% LTV.