Small deposit mortgages cost £300 more a month

17 January 2017

Homebuyers with a 5% deposit are paying almost £300 a month more for their mortgage than the equivalent purchaser with a 25% deposit.

While interest rates have been declining across the board during the last six months, the cost of your monthly repayments still varies significantly depending on your deposit size.
Research by AmTrust and Moneyfacts shows that based on average market rates, the typical homeowner with a 5% deposit has monthly repayments of £762.

This is £294 more than the £468 paid each month by those with 75% loan-to-value (LTV) mortgage.


Research also suggests the gap between high and low deposit buyers is widening as the number of larger deposit mortgages on the market has grown twice as fast as small deposit loans.

Average interest rates decreased during the second half of 2016 with both 75% and 95% LTV mortgages reaching new record lows of 1.42% and 3.66% respectively in November.
In today’s market, the average 25% deposit has a cash value of £39,389 versus £7,878 for those who have saved 5%.

(Click the image to enlarge)

However, the gap between the two rates has been growing since the start of last year suggesting banks and building societies are turning away from small deposit buyers.


‘Larger deposits benefit greatly when it comes to getting and paying a mortgage’
Simon Crone, commercial director at AmTrust International, says: “There is some positive news for first time buyers who have seen a slowdown in house price growth and improved affordability for mortgage repayments as a result of record low interest rates over the past year.

“But it is increasingly clear that lenders are fighting harder to attract borrowers with larger deposits than those with small ones. The number of available products, a widening price gap and lower repayments all mean those who can save larger amounts for a deposit benefit greatly when it comes to getting and paying for a mortgage.”

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