So where do you start when buying a house? Should you use a big or small deposit? Sometimes you don’t have a choice! However one thing is clear, the more you can put down as a deposit for a house purchase, the cheaper the mortgage will be!
Putting down a bigger deposit can have several benefits. The first is obvious, the more you put down, the less you need to borrow. The less you borrow, the cheaper it is! The other benefit of putting down a larger deposit can be falling into a lower 'Loan to Value' (LTV) threshold. Click To Tweet In other words, mortgage products are priced according to their LTV (and the type and term of the product). An example could be you’ve got a deposit which gives you a 86% LTV. If you can find a bit more money and get to 85% LTV it is highly likely you’ll get a better interest rate on your mortgage.
Of course, just moving an LTV by a few percentage points might mean having to find thousands more as a deposit, because it is all based on the mortgage amount against the value of the property. So it is not always possible and will be based on what you can do. However being aware of this, can make a huge difference in what you end up paying on your mortgage.