How do mortgage deposits work?

A deposit is a down payment, and it’s the amount you have to put towards the cost of the property you’re buying. The more you can put down as a deposit, the less you’ll need to borrow as a mortgage and the better the mortgage rate you’ll be offered. 

A deposit is a percentage of the property’s value, so if you bought a house for £200,000, a 10% deposit would come to £20,000.

Your mortgage provider will lend you the remaining 90% of the purchase price. 

This is what is known as the Loan-to-Value (LTV). 

It measures the percentage of the property price that you will need to borrow to make the purchase. 

In the above example, a 90% LTV mortgage would cover the remaining £180,000, which would be the amount you owe your lender.

A 95% mortgage would mean you would put down a 5% deposit – or £10,000, meaning you would borrow a mortgage of £190,000 in the above example.