How does your deposit affect your interest rate?
The larger your deposit, the better fixed rate interest deals you can get. Therefore, if you have a deposit of 40%, you’re likely to be eligible for the cheapest mortgage deals. If you’re a first-time buyer, however, your deposit will probably be between 5% and 10%, which means your interest rate will typically be much higher than if you put down a larger deposit.
To understand how much deposit you’ll need, look at the maximum loan to value ratio a lender is prepared to offer you – you can do this using our mortgage eligibility checker.
A loan to value ratio (LTV) is the amount you’re borrowing on a mortgage compared to the overall cost of a property. Mortgage lenders usually have a maximum LTV ratio they’re willing to offer you. As a general rule, the lower the LTV, the lower the rate of interest you might be charged.