Deposit vs Rate Calculator
See what reaching a lower loan-to-value band saves each month and over the term, and what return the extra deposit actually earns.
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Mortgage rates step down at loan-to-value thresholds — commonly 90%, 85%, 80%, 75% and 60%. Crossing one is worth far more than the deposit increase suggests, because a lower rate applies to the whole loan for the whole term while the extra deposit is a single payment.
This works out the extra deposit needed to reach a target band and expresses the saving as a return on that money, which is the only fair way to judge whether waiting to save more is worth it.
The calculation
The deposit needed at the target band is price × (1 − target LTV). The extra required is the gap from your current deposit. Both loans are then priced at their own rates over the same term, and the monthly difference is expressed as an annual return on the extra deposit.
Worked example
On a 300,000 property, a 45,000 deposit is 85% loan-to-value. Reaching 80% needs 60,000 — 15,000 more. The loan falls from 255,000 at 6.4% to 240,000 at 6%, and the payment from about 1,706 to 1,546, saving around 160 a month. Over 25 years that is roughly 47,900, and the extra 15,000 is earning about 12.8% a year.
Weigh it against prices moving
The return only materialises if the property is still available at the same price when you have the extra deposit. In a rising market the price step can outweigh the rate saving entirely, which is exactly what the buy now or wait comparison tests.
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Create your free property pageFrequently asked questions
Where are the loan-to-value thresholds?
Most lenders price in bands at 95, 90, 85, 80, 75 and 60 percent. The largest step is usually crossing below 80 or 90 percent, because that is where mortgage insurance requirements and risk pricing change most sharply.
Is it worth delaying a purchase to save more?
Only if the property market is flat or falling. In a rising market the price increase and the rent paid meanwhile frequently exceed the rate saving, so run the buy now or wait comparison before deciding to delay.
Can I get to a lower band by negotiating the price?
Yes, and it is often easier than saving more. A price reduction increases your deposit as a percentage without any extra cash, so a successful negotiation can move you into a cheaper rate band on its own.
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