Mortgage Deposits Explained

A mortgage deposit is key when buying a home. Find out how they work here.

What is a mortgage deposit?

Buying a home is one of the biggest, most exciting purchases you’ll ever make. 

To buy a house or flat, you’ll need to pay a chunk of money upfront – this is called a mortgage deposit. It’s usually the most expensive part of getting a mortgage.  

How much will you need for a deposit?

The minimum mortgage deposit you’ll need depends on the lender you use. Generally, it ranges from 5% to 20% of the property’s purchase price.  

For the latest range of Halifax mortgages and details of the deposit you’ll need, use our mortgage calculator.

How does a mortgage deposit work?

With a mortgage deposit, you’re paying for a chunk of your house upfront. You’ll get a mortgage to pay for the rest, which you will need to pay off every month. 

A bigger mortgage deposit means you’ll have paid off more of your house at the start, which could mean lower monthly repayments. It can also mean you’ll pay less interest on your mortgage. 

How to save for a deposit

Set realistic savings goals
Set goals for what you’ll need to save each month to achieve your overall target.

  • Try setting up a standing order for savings, so you’ll save just like paying a monthly bill.
  • Saving less over a longer period may be an easier way of achieving your goals. 
  • Put aside £150 per month for 10 years, for example, and you’ll have saved £18,000. You’ll have also earned interest on your savings, to add to your deposit.

Save with a partner

Saving for a mortgage deposit is a lot easier if you can pool your resources, rather than going it alone. Saving as a pair could help you reach your mortgage deposit goal faster. 

Help from relatives

Many people turn to the bank of mum and dad when saving for a mortgage deposit. Your parents or other relatives might be able to help you out with a cash gift.

If you’re lucky enough to get a cash gift from your family, you’ll need to tell your lender. You will also need evidence that your parents won’t be asking for the money back. 

Shared ownership

Buy a section of the property and pay rent on the rest through shared ownership

You’ll pay a smaller deposit with a shared ownership mortgage. This is because you aren’t paying a percentage of the whole value of the house. 

But remember, you’ll also have to pay rent on the percentage of the property you’re not buying. You may need to be a first time buyer to get a shared ownership mortgage.

The content on this page is for reference and does not constitute financial advice. For impartial financial advice, we recommend government bodies like the Money Advice Service.

Calculators and tools

We have a range of mortgage calculators to help you:

  • Find out how much you could borrow from Halifax
  • See how much you could save if you make overpayments on your mortgage
  • Get an idea how a change to the Bank of England Base Rate could affect your monthly payments
Use our calculators and tools

Speak to someone

You can talk to us over the phone or use our mortgage video service from the comfort of your own home.

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