The Myth: A Bigger Deposit Always Gets You a Better Deal
More equity lowers your LTV and usually reduces your rate, but there are diminishing returns. Deploying excess cash into a second property at 75% LTV almost always outperforms over-equitising one.
It's logical to assume that putting down a bigger deposit always means a better mortgage deal. While a lower Loan-to-Value (LTV) does unlock better rate tiers, there are points of diminishing return that sophisticated investors actively exploit.
Standard rate bands typically change at 80%, 75%, 70%, 65%, and 60% LTV. Dropping from 80% to 75% can meaningfully reduce your rate. But dropping from 75% to 60% by adding an extra £150,000 deposit often yields a negligible rate improvement — perhaps just 0.15–0.3%. That £150,000 deployed into a second property at 75% LTV could instead generate a completely new income stream and a second asset appreciating in value.
Professional investors are acutely aware of 'capital efficiency'. They deploy the minimum equity necessary to access the best commercially viable rate tier, and redeploy the remainder into further acquisitions. Locking your capital in a single property is a homeowner habit, not an investor strategy.