How Does a Mortgage Deposit Work?
New buyers may be unfamiliar with the way mortgage deposits work, so at Mortgage House we have decided to break it down for any possible inquirers. A mortgage deposit is a buyer’s initial payment towards the purchase of a home or property. This deposit is up to 20% of the full purchase price of the home paid to the lender. A borrower that pays a deposit of 20% or more is exempt from paying for Lenders Mortgage Insurance (LMI). A borrower that pays a deposit of less than 20% is required to pay for LMI.
Lenders Mortgage Insurance ensures protection for a lender in case of a borrower not paying scheduled loan payments or instances that end in foreclosure. LMI also allows for borrowers with low mortgage deposits to successfully purchase a home, but keep in mind that low mortgage deposits lead to higher monthly loan payments. Our Best Rate Mortgage Calculator is a great tool that was created to assist potential buyers in determining the best mortgage rate for their financial status.
The Mortgage House professionals are prepared to assist potential buyers in all areas of the home buying process and take client satisfaction seriously to ensure that all of a client’s needs are being met. If you need assistance with buying a new home or property, reach out to us so we can determine the best way to help.
Mortgage Deposit Conclusion
A mortgage deposit is the first payment that a buyer makes on a purchase and is a percentage from 5%-20% of the home or property’s full purchase price. For further assistance with mortgage deposits, reach out to our professionals at Mortgage House for specialized support.