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This can cause some confusion because it can mean two things.
1) The "mortgage deposit" ie the difference in the price of the property vs the amount you can borrow. (See below for more details).
2) The "down payment deposit" you have to give the seller when you exchange contracts. (See below for more details).
1) The "mortgage deposit"
This is the difference between the price of the house and the mortgage you've secured. So if the house costs £100,000 and you've got a 75% mortgage (ie £75,000), the deposit would be £25,000.
This £25,000 is what you'd have to find from other sources eg your savings.
It's usually the biggest up front cost to bear in mind when buying a home.
If you already have a mortgage and are selling your old house then, hopefully, you've made a profit (ie your home is worth more than when you bought it and you've got a surplus). Normally you'd put this towards the new home as the deposit.
If you're a first time buyer you've hopefully got some spare cash to put down to avoid paying the higher interest rate which you'd probably be charged for a 100% mortgage.
2) The "down payment deposit"
When you exchange contracts you'll have to pay an agreed down payment deposit to the sellers which is usually 10% of the sale price.
If you've got a 100% mortgage then the mortgage lender would arrange to pay this. Otherwise you'd have to have it ready to pay over when you exchange contracts.
http://www.mortgagesorter.co.uk/costs_buying_home.html#deposit |
