Archive for the ‘Deposit’ Category

I haven’t got a deposit for a home loan

September 10th, 2010

Searching for a home loan without having a deposit to hand can be difficult, particularly for buyers who don’t already own a home. In that situation, the potential home buyer can feel stuck.

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Deposits and mortgages

July 28th, 2010

One of the most crucial parts in getting a mortgage is to have a deposit.   A deposit is the amount of money that the person will need in order to buy a house with a mortgage.  It is usually expressed as a proportion of the house value.  So with a $250,000 house a 20% deposit will be a $50,000 and this will mean that there will be a $200,000 mortgage.

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What are mortgage deposits?

January 27th, 2010

In most mortgages a deposit is required, which is a sum of money that the buyer pays as a down payment before the lender will advance any money.

The size of the deposit increases the range of the mortgages on offer.  This will mean that there are more terms to choose from, including lower interest rates, different repayment periods and the ability to pay back early.  It is therefore one of the easiest ways to reduce the cost of the mortgage to increase the size of the deposit either by increasing the amount of money in the deposit or by reducing the price of the house.

The reason why deposits are so important to lenders is that it reduces the risk of the lender losing money.  This is partly because a borrower is more likely to prioritise mortgage repayments over other demands in order to keep their investment, and this tendency is likely to be more pronounced the higher the amount of money that they have.

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