How Much Deposit Do You Need for a Mortgage ?

You want to buy a home. But there’s one big question that keeps bothering you. How much money do you actually need to save before you can even apply? You’re not sure if your savings are enough.

And that feeling of not knowing makes the whole thing feel scary and out of reach.

Here’s the good news. You don’t need to guess anymore. In this guide, we’ll break it all down in simple terms. You’ll learn exactly how much deposit you need for a mortgage in Slough, and how to get there faster than you think.

Most UK lenders ask for a deposit of at least 5% of the property price. So on a £250,000 home, you’d need at least £12,500 upfront. That’s the minimum. How much you actually need depends on your circumstances, the property, and the mortgage deal you want.

What is a mortgage deposit?

A mortgage deposit is the money you pay upfront when you buy a home. The rest comes from your mortgage.

Say you buy a £250,000 home with a £25,000 deposit. That is 10% of the price. Your mortgage covers the other 90%, or £225,000.

Your deposit becomes equity in your home from day one. The bigger it is, the less you owe and the less interest you pay over time.

How much deposit do you need?

The minimum is usually 5% of the property price. This is often called a 95% mortgage, because you are borrowing 95% of the value.

Deposit	You need on a £250,000 home	You are borrowing
5%	£12,500	95%
10%	£25,000	90%
15%	£37,500	85%
25%	£62,500	75%

The percentage you borrow is called the loan to value, or LTV. A lower LTV usually means better rates, because you are less of a risk to the lender.

Lenders set their own rules, and these can change. Some will not offer 95% mortgages on flats or new builds. It is always worth checking current criteria rather than assuming the same rules apply everywhere.

How much should you actually save?

The average first time buyer in the UK saves more than the minimum. Figures from Halifax have put the average deposit at around 15% to 20% of the property price, higher again in London.

The average first time buyer in the UK saves more than the minimum. Figures from Halifax have put the average deposit at around 15% to 20% of the property price, higher again in London.

Why a bigger deposit helps?

• You are likely to get a lower interest rate
• You will have more lenders and deals to choose from
• Your monthly payments will be smaller
• You own more of your home from the start, which protects you if house prices dip

Even an extra 5% can move you into a cheaper pricing band, so it is worth weighing up whether waiting and saving a bit more makes sense for you.

Does your deposit affect how much you can borrow?

Your deposit affects your LTV, but how much you can borrow mostly comes down to your income, your outgoings, and your credit history.

Lenders usually check:

• How much you earn
• Your credit score and credit history
• Existing debts, such as loans or credit cards
• Your regular outgoings

Most lenders will lend up to around 4 to 5 times your yearly income, though this varies. A bigger deposit does not automatically mean a bigger loan. It is your deposit and your affordability together that decide what you can buy.

How to save for your deposit?

• Sort out existing debts first. Paying off credit cards or loans frees up money each month for saving.
• Set up a standing order. Move money into savings automatically on payday, so it happens before you can spend it.
• Pick the right savings account. Instant access suits flexibility. A fixed rate account may pay more if you can leave the money untouched.
• Look at your spending. Cancel unused subscriptions and cut back on the extras for a while.
• Compare your bills. Switching energy, broadband or insurance providers can free up more to save.

Set a savings goal you can actually stick to. A target that feels realistic each month is more useful than one you give up on after a few weeks.

Getting help from family

Many first time buyers get help from parents or other family members. This is called a gifted deposit.

Your lender will want to know:

• The money is a genuine gift, not a loan to be repaid
• Who the money is from
• Where the money came from originally

You will usually need a signed letter from the person gifting the money, confirming it is a gift and that they have no claim on the property. Always tell your lender about a gifted deposit. Not declaring it can be treated as mortgage fraud, even by accident.

Schemes that can help

A few schemes exist to help buyers with smaller deposits. Rules and availability change, so always check the current details with a broker or on GOV.UK.

• Mortgage Guarantee Scheme. Backs some 95% mortgages, making lenders more willing to offer them.
• Lifetime ISA (LISA). If you are 18 to 39, you can save up to £4,000 a year towards a first home and get a government bonus on top.
• Shared ownership. You buy a share of a home and pay rent on the rest, which can mean a smaller deposit.

Other costs to budget for

Your deposit is the biggest cost, but not the only one. Also plan for:

• Stamp Duty. Called Stamp Duty Land Tax in England and Northern Ireland, Land Transaction Tax in Wales, and Land and Buildings Transaction Tax in Scotland. Rates and first time buyer reliefs differ, so check the current rules for where you are buying.
• Survey costs. A proper survey is separate from the lender’s valuation and is worth having, especially on older homes.
• Legal fees. Covers your solicitor, searches and land registry costs.
• Mortgage fees. Some deals charge an arrangement or product fee, often a few hundred pounds.

Your mortgage deposit is not the same as your exchange deposit

Your mortgage deposit decides your LTV and mortgage deal. There is a second, separate deposit, usually around 10% of the price, paid to the seller when contracts are exchanged. Your solicitor handles this for you.

Because large sums move at this stage, it is a common target for scams. Never transfer money because of an email alone, even if it looks like it is from your solicitor. If in doubt, call them on a number you already have and check by phone first.

What to do next

Frequently Asked Questions.