The down payment: how much to put down and what it changes

The first effect is obvious: it reduces the amount you borrow. Interest accrues on the outstanding balance, so a smaller debt means less interest in every individual month and a smaller total over the full term.

The second effect is quieter but no less important: the bigger your own share in the property, the less the bank risks by lending. Lower risk means a lower risk premium in the rate. So raising the down payment often pays twice — a smaller debt, at a lower rate.

A bank’s own calculator usually shows the monthly payment falling as the deposit rises. The fall looks modest, which makes the down payment feel like a question of convenience.

Over a long term that impression is misleading. The difference in the payment is multiplied by the number of months, and across twenty years a modest figure grows into a sum comparable to a renovation or a car. What to look at is the interest over the full term — which is exactly what our mortgage calculator shows.

The logic of "put down as much as possible" runs into an obvious limit: after the purchase you face costs you did not have before. Paperwork, insurance, moving, furniture and renovation all land in the first months, when the loan payment has already started.

A sensible rule is to keep a reserve covering several months of obligatory payments plus the unexpected, and to put everything above that reserve into the deposit. A loan taken with a large deposit but no buffer is harder to service than one with a smaller deposit and a cushion.