What is a mortgage deposit?

A mortgage deposit is a lump sum of money you pay towards your home upfront. 

This is a percentage of the total house price and is usually at least 5%. The recommended deposit amount is about 20%.¹ 

Unless you have the money to pay the full price of the home you wish to buy, you’ll pay for the rest with a mortgage.

How much deposit do I need to buy a house?

Usually, you need to put down a deposit of at least 5% of the property’s value. This will mean you have a 95% LTV mortgage.

In April 2021, the average property price in the UK was around £251,000.²

This means a 5% deposit would be about £12,550. Or £25,100 for a 10% deposit.

The bigger the deposit the better.

A bigger deposit will give you more deals to choose from and lower monthly mortgage payments.

Coronavirus has led to most lenders only accepting deposits of at least 10%. This made it harder to get a mortgage with a deposit of just 5%.

LTV vs. monthly repayments - infographic

Getting a mortgage with no deposit

You can get a mortgage with no deposit but they're not common. This is a 100% LTV mortgage.

You're more likely to get a no deposit mortgage by getting a guarantor mortgage.

For a guarantor mortgage you’ll need to have a family member or friend who will guarantee the payments for you. The guarantor will need to own their own property.

If you miss any mortgage payments your guarantor is responsible.

Some lenders, like Kent Reliance, offer 100% mortgages on the shared ownership scheme.

Government schemes, such as Right to Buy, may mean you do not need to save a deposit. This is because you could use the discount offered by the scheme to cover the deposit.

There are drawbacks to choosing 100% mortgage:

  • lenders charge a higher rate

  • your monthly repayments are higher than they would be with a larger deposit

  • you’ll pay more in total than you would with a larger deposit because of the amount of interest you’ll have to pay

  • lenders will look for an almost perfect

  • risk of negative equity

Negative equity

If you do go for a 100% mortgage, remember that there can be a higher financial risk.

You're more likely to fall into negative equity if house prices drop if you borrow 100% of the property value.

Negative equity is when your property’s value is less than the amount you borrowed for it. You’d still have to pay back the amount you agreed on when you bought it.

Getting a mortgage with a small deposit

It's a good idea to put down at least a small deposit so you have more mortgages to choose from.

You can put down as little as 5%, which means you'll need a 95% LTV mortgage. But the larger the deposit amount, the better the mortgage rates and deals you'll have access to.

How to save for a house deposit

Before you begin saving for a deposit, think about:

  • how much you can save each month

  • where you want to buy and how much a property costs there

  • how you’ll save

  • how big a deposit you want to save such as 5%, 10%, 15%

Think about what you get paid and spend each month.

What do you buy often? Where can you cut costs so you can save more money.

Look through your bank statements and list what you pay for. This can help you get a clearer idea of where your money goes.

Look at how you can cut costs in the short term, letting you save more for a deposit.

You can do this by:

  • cutting down how much you spend each day

  • reducing your bills. You can switch energy, broadband or mobile providers or cancel unused subscriptions

  • using apps to budget or save money

  • moving back in with parents or renting somewhere cheaper

Think about what money you have coming in and going out every month and then think about:

  • what kind of property you’re interested in buying

  • what it’s likely to cost

  • how big a deposit you want to save

The bigger the deposit the better.

You could go for the smaller 5% deposit. This would mean you need to save less but you’d pay more on your mortgage each month.

A bigger deposit will mean you pay less each month.

Use a mortgage calculator to see how much you could borrow for a mortgage.

Our calculator will look at:

  • how much you and the person you're getting a mortgage with earn a year

  • your deposit amount

  • what you spend on average a month

You could work out how much you could borrow after you've saved a deposit. But doing it before this will help you get an idea of how big a mortgage you can take out when you’re ready.

It also lets you to figure out if the estimate is enough to buy the kind of home you want. Or if you should keep saving to buy a more expensive property.

An affordability calculator can only give you an estimate of what you could borrow.

Lenders will need more information when they come to assess how much you could borrow.

Once you’ve decided how much you plan to save for a deposit, you should think about putting it in a savings account.

You can put savings into a:

Set up a direct debit or standing order to put some money into your ISA or savings account every payday. This will make it less likely that you'll spend the money you should be saving.

Sticking to budgets and plans is not easy.

It's worth it in the long run to get a healthy deposit to reach your goal of buying your own home.

How long it takes to save a deposit

The average property price in the UK in 2021 is around £251,000.²

It takes on average 10 years for a single first time buyer to save a 15% deposit.³

It’s 15 years for people buying in London.

In most cases you only need to have at least a 5% deposit but the average deposit people put down is 15%.

A 15% deposit of a £235,000 property is £35,250.

The time it takes to save for a deposit depends on:

  • how much you earn

  • any financial help from family

  • the total you want to save

  • how much you to save each week, month or year

Saving for a deposit during lockdown

You could have saved an average of £2,929 if you worked from home during the coronavirus lockdown instead of travelling to London.

We surveyed almost 80 locations within a 45 commute of central London. This was to see how much first time buyers could save by working from home instead of buying a monthly train ticket to London. We looked at the 9 months between April and December.

We then checked the average asking price for 2 bedroom properties in those locations.

At the moment, you'd need a 10% deposit for one of these properties. It's very hard to get a 5% deposit mortgage right now.

The largest lockdown savings were for first time buyers living in Didcot, Oxfordshire. If you worked from home between April and August, you would've saved £4,669on your train tickets to London. That's over 13% of the deposit needed to buy a property there.

In Milton Keynes, first time buyers could've saved £4,631 by not commuting to London. This is almost 22% of the deposit needed to buy a 2 bedroom property there.

In Oxshott, Surrey you would've saved just 1.6% of the £93,000 deposit you'd need to buy a 2 bedroom property there.

How to get help with a house deposit

With house prices so high, it's not easy to save for a deposit.

It can be even harder if you're on a low income, buying alone or are a young first time buyer.

There are different ways to get help towards your house deposit.

As well as guarantor mortgages, family or friends can also help by gifting you your deposit or part of it.

You may also be able to borrow from your parents, and pay them back later.

Learn more about how parents can help with a mortgage deposit in our first time buyer guide.

There are many government schemes to help you buy a home.

Some of the most popular schemes are:

Learn more in our government schemes guide.

Do I need a deposit to buy my council house?

Some lenders might ask for a deposit if you want to buy your council property.

Others let you use the discount you get with Right to Buy for a deposit.

Find out how you can buy your council house in our Right to Buy guide.

Where to go from here

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Read our guide for first time buyers

Everything a first time buyer needs to know

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