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26/11/2008 14:49:54

Deposit differences cause 'mortgage gap'

The value of a deposit put down on a property could cause significant differences in a homeowner's annual mortgage repayments, it has been revealed.

Figures released by mform.co.uk reports that those who place a 40 per cent deposit on a home will be able to access a 3.99 per cent two-year tracker rate deal for a £150,000 mortgage.

However, for those putting down a 20 per cent deposit, rates could increase to 5.99 per cent, Money Marketing reports.

Meanwhile, it was revealed that a two-year fixed rate deal for a 40 per cent deposit will result in a total cost of £21,265, some £4,464 cheaper than if people put a ten per cent deposit on the same mortgage product.

Francis Ghiloni, marketing and business development director for mform.co.uk, said: "The mortgage market is entirely back to normal as long as you have a deposit of 40 per cent which is okay for some remortgagers."

However, he claimed this is "a long way from normal" for many consumers and in particular will not help families move to a larger home.

Earlier this week, the British Bankers' Association revealed that 21,584 mortgages for new house purchases were approved by major UK banks in October, a fall of 52 per cent from the same month in 2007.