If you plan to place a 10% deposit on the property you are buying, then you will need a 90% mortgage.
This means that you pay 10% of the purchase price in cash and borrow 90% from your mortgage lender.
90% is a fairly common level of mortgage borrowing, especially for younger house buyers.
The good news is that by providing a 10% deposit you should qualify for most mortgage lenders’ lowest interest rates and should get a full choice of interest rate repayment options.
Advantages of 90% Mortgages
One of the benefits of a 90% mortgage is that it provides a reasonable level of protection from negative equity – only very rarely do house prices fall by more than 10%, meaning that in a worst-case scenario you should usually be able to sell your house and pay off your mortgage.
Providing a 10% deposit also gives you access to a wide range of competitive interest rates and repayment options, including:
fixed rate, variable rate, discounted and trackers and interest only mortgages
A general rule is that larger deposits provide access to better mortgage deals – and you always save money on interest payments by borrowing less to start with!
How Can I Find The Best 90% Mortgage?
The mortgage marketplace is huge and includes not only all the well-known high street lenders but also many other large lenders who prefer not to deal with borrowers directly, but instead receive all their customers from independent mortgage brokers.
This means that while you may find the best mortgage deal for you on the high street, there is a good chance you may not.
Talking to a mortgage broker about your needs is normally free of obligation or cost, and may result in you finding a better mortgage deal than you would have done on your own.