This is a common question we receive when clients are carrying out early enquiries on their future mortgages. One thing we always explain is that the larger the deposit, the lower the mortgage interest rate.

This is because the lender perceive a higher deposit as representing a lower risk for them especially in the event of property values dropping.

There is a sweet spot where a larger deposit doesn’t necessarily mean an even lower rate however.

If someone has a 25% deposit based on the purchase price of the property they are considering, then this generally commands the best rates.

There are mortgage rates out there pitched at people with 30% or even 40% deposits but these are not universally available with every lender.

So, borrowing at 75% of the value of a property is generally the best place to be.
Having a deposit at that level is not always that easily achievable however especially for first time buyers, so lenders have lots of alternatives too.

Interest rates start to increase on mortgages where the level of borrowing is above 75% of the value of the property and they do so at every 5% increment.

So for example, borrowing at 80% (with a 20% deposit) will cost less than at 85% (and a 15% deposit) and so on all the way up to 100%.


Great news for first time buyers as very recently Skipton Building Society launched a product aimed at people who are currently renting but wanting to get on the housing ladder, where they haven’t got a deposit but do have sufficient income to support a mortgage.


There are hoops to jump through as you’d expect to get this mortgage product but that’s where we come in as mortgage experts!

So, if you’re looking to buy or move home and want to find out how much deposit you require, feel free to get in touch with Compass Mortgages and one of our friendly team will be more than happy to help you understand your options.