Different types of Mortgage deposit?

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What is a Mortgage Deposit?

A Mortgage Deposit is a sum of money you put down toward the purchase of a property.

The greater your deposit is the cheaper the Mortgage you will be eligible for.

This is because the Mortgage Lender will have a greater chance of getting their money back, should you have a change of circumstances. And be unable to keep up with your monthly repayments.

What are the different types of Mortgage Deposit?

Personal Deposit – This is a deposit you have personally saved or have to contribute toward the purchase of your new home.

Gifted Deposit – This is a sum of money you are given by someone, such as a friend or family, to put toward the purchase of your new home.

A loan – This is something that most people would like to do, but to the Mortgage Lenders criteria and rules are often not allowed to.

This is because if someone was to loan you the money, the person loaning the money could argue that the monies are secured against the property. The Mortgage Lender wouldn’t allow this as you’d then essential have two Mortgages on your home. 

This then affects the lenders interest in your property.

Gifted Deposit

This is an increasingly common form of deposit, as it gets more and more difficult to save as well as pay for everyday living.

A gifted deposit is where someone such as a family member of friend gives you the money to put toward the property purchase.

All Lenders accept a gifted deposit from a close family member.

And there are some lenders which will accept gifted deposits from Friends, Distant Relatives, a Cohabitor (partner you live with) and others.

Giftors will usually need to provide ID, Bank Statements (to show build of funds) and provide a letter to confirm the gift is in fact that.

A gifted deposit letter template can be found, here


Things to consider

The origins of all deposits will need to be verified and Bank Statements and ID will need to be provided most of the time by anyone contributing toward the deposit.

The Bank Statements will need to show a build up of funds, and larger transactions in or out will also need to be evidenced by other bank statements.

The above is all because of money laundering laws and requirements.


Alternatives to “cash” deposits or No Deposit Mortgages

There are variety of alternatives which can help if there is a lack of personal of gifted deposits.

These are general known as alternative deposits or in some cases No Deposit Mortgages or 100% Mortgages:

Guarantor Mortgages/Family Assist Mortgages

Concessionary Purchase Mortgages


Guarantor Mortgages/Family Assist Mortgages

Mortgages Lenders each have their own words for them, and they usually differ ever so slightly with each Lender.

They could be called Helping Hand, Family Assist, Springboard Mortgages. But there all similar and often known as Guarantor Mortgages.

This is where a relative or friend puts down some collateral such as a charge on their property or some savings. And guarantees that if you are unable to keep up with repayments, the collateral and/or Guarantor will cover this.


Concessionary Purchase Mortgage

This has become increasingly common and is a great way to help a relative or friend without actually transferring any physical monies.

A concessionary purchase mortgage is where a landlord or family member for example, sells their property to you at an amount less than the value of their property.

The difference between the value of the property and the amount you purchase the property for is used as your deposit.


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