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Mortgage deposits: how much deposit do I need?
Learn the ins and outs of mortgage deposits. Find out how they work and how much you might want to save.
What is a mortgage deposit?
A mortgage deposit is the money you pay upfront when buying a home. The rest of the cost is then covered by a mortgage, which is repaid to your lender.
- For lenders, your mortgage deposit acts as security for the loan.
- For you, it can mean more equity in your home.
- A larger deposit means you don’t need to borrow as much money. This gives you a better loan to value (LTV) ratio, which could lead to lower interest rates and monthly repayments.
How much deposit do you need to buy a home?
To buy a home you’ll probably need a deposit between 5% and 20% of the property’s purchase price. This might differ based on the home you’re buying and how much you can borrow.
How much you need to save for a mortgage deposit usually depends on:
- the value of the property and what you can afford. This could affect your loan to value ratio.
- whether you’re using a government scheme, such as the Lifetime ISA. These can help you boost your deposit savings.
- whether you’ve received your mortgage deposit as a gift from family or friends. This might mean you can focus on saving for other moving costs rather than the deposit. You may need a gifted deposit letter to prove this to the lender.
What is the minimum mortgage deposit on a home?
Usually, the minimum mortgage deposit you can have is 5% of the property value. This is known as a 95% mortgage, where you borrow 95% of the total value of the property. You might need to meet a set of criteria to qualify for this type of mortgage.
While the minimum deposit can start from 5%, saving beyond this amount could make a big difference to your mortgage interest rate. So, it might be worth saving for longer to help you find a better deal.
If you qualify for our Family Boost mortgage, you might not need a deposit at all. Instead, a family member puts 10% of the purchase price into a 3-year fixed savings account to secure the mortgage.
Explore your next steps
Get started with the mortgage calculator or an Agreement in Principle.
You could lose your home if you don’t keep up your mortgage repayments
Need help with your mortgage deposit?
Buying your first home is exciting, but saving for a home deposit can be hard. Luckily, there are options that could help you get on the ladder.
Family Boost mortgage
With our Family Boost mortgage, your family puts in 10% of the house purchase price into a 3-year fixed term savings account to act as your deposit.
The property will be all yours. Your family will get their savings back after the 3 years, plus interest, if you keep up with your repayments.
Government-backed schemes
There’s a range of government-backed initiatives to help you onto the property ladder.
These include Right to Buy, Shared Ownership and the Help to Buy: Equity Loan. So, if you're a first-time buyer, there could be a scheme that will help you.
Shared ownership
You’ll pay a smaller deposit with a shared ownership mortgage. This is because you only pay a deposit on the part of the house you are buying and not on the value of the whole house.
But remember, you’ll also have to pay rent on the part you don’t own.
Tips for saving for a deposit
Building a deposit for your mortgage starts by creating a smart savings plan. From setting a budget to cutting down non-essential spending, find out how you could reach your deposit goals with our handy tips.
Let’s take a closer look
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The simple rule with mortgages is the more you save upfront, the better your mortgage deal could be. A larger mortgage deposit reduces your loan-to-value (LTV). This can unlock lower mortgage rates, lower your monthly repayments and give you more equity in your home.
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