When buying a home you will need a deposit
Your deposit amount can be made of money you have saved or the equity you already have in the property you own.
The minimum deposit lenders will consider is 5% of the property value however the bigger deposit you have the more likely your interest rate will be lower, rates tend to get better from 15% deposit and with the best rates available with at least a 40% deposit. Interest rates improve because the lender is taking less risk with a larger deposit.
The loan to the property value is called LTV. For example if you were looking at purchasing a property for £100,000 the minimum LTV would 95%, meaning you would require a deposit of 5% or £5000.
Lenders also assess your income and use multiples to determine if your net income each month is enough to service the mortgage repayments.
Read our FAQ‘s for more mortgage questions explained.