How Much Deposit Do You Need for a Mortgage?

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One common question is “how much deposit do I need for a mortgage?” In the UK, the mortgage deposit is the portion of the home price you pay upfront from your own savings moneyhelper.org.uk. Most lenders typically require at least a 5% deposit of the property value moneyhelper.org.uk. For example, on a £280,000 home you’d usually need about £14,000 in cash as a deposit moneyhelper.org.uk. Your deposit shows the lender you have “skin in the game” and reduces the loan size. Having even a modest deposit unlocks more deals and cheaper interest rates. By contrast, 100% mortgages (no deposit) do exist but are rare and carry big risks (e.g. if prices fall you could owe more than the home’s value) moneyhelper.org.uk. In practice, most buyers save up a deposit first because it makes the mortgage cheaper and more accessible moneyhelper.org.uk.

What Is a Mortgage Deposit and Why Is It Important?

A mortgage deposit (or down payment) is simply the cash portion of the purchase you pay yourself, rather than borrowing it. For example, if you have £12,000 savings and the home costs £250,000, you’d borrow the remaining £238,000 as a mortgage moneyhelper.org.uk. The deposit matters because it reduces the lender’s risk and improves your mortgage terms. Banks charge lower interest rates to borrowers with bigger deposits, since a large deposit means a smaller loan-to-value (LTV) ratio. According to MoneyHelper, “mortgage deals are usually cheaper if you have a large deposit”, and the very cheapest rates typically require deposits of at least 40% of the home’s value moneyhelper.org.uk. In short, a deposit gives you access to more mortgage options at better rates. Even a 5% deposit opens up the basic market, while higher deposits unlock the best deals and lowest costsmoneyhelper.org.uk.

Minimum Deposit Requirements (5%, 10%, 15%, 20%)

Mortgage deposits are usually discussed in percentage terms of the property price. Here are typical thresholds:

5% deposit (95% LTV): Many lenders now offer loans at 95% LTV (meaning a 5% deposit) under special schemes. For example, the UK government’s mortgage guarantee lets buyers with only 5% down access a 95% loan until June 2025 moneyhelper.org.uk. However, 95% mortgages carry higher interest rates than larger-deposit loans. You’ll have a very small equity cushion and risk of higher payments if rates rise.
10% deposit (90% LTV): Increasing the deposit to 10% lowers your LTV to 90%. This is often a common minimum for standard first-time buyer deals. A 90% LTV mortgage is easier to find and typically has better rates than a 95% LTV. Which? reports that as of 2025, a 90% LTV (10% deposit) deal runs around 4.8%, compared to sub-4% rates at lower LTVs which.co.uk. In other words, moving from 5% to 10% deposit can reduce your interest rate.
15% deposit (85% LTV): With 15% down, lenders view you as lower risk. More products become available, and rates improve further. Many high-street deals consider 85% LTV (15% deposit) nearly as good as 80% LTV in terms of cost.
20% deposit (80% LTV) or higher: This is the sweet spot for affordability. Deposits of 20% or more (i.e. LTV 80% or less) qualify you for the cheapest mortgage deals on the market moneyhelper.org.uk. In fact, MoneyHelper notes that the lowest rates are usually reserved for buyers with deposits of 40% or more moneyhelper.org.uk (which means 60% LTV). But even hitting the 20% mark typically unlocks significantly better rates than 5–10% deposits. For example, 60–75% LTV deals (i.e. 25–40% deposit) were offering sub-4% fixed rates in April 2025 which.co.uk.

In summary, the more you put down, the lower your loan-to-value (LTV) will be and the more favorable the mortgage rate. Loan-to-value (LTV) is simply the loan amount divided by the property price. For example, on a £200,000 house a £20,000 deposit is 10%, giving a 90% LTV mortgage moneyhelper.org.uk. Lower LTV means lenders see less risk. As MoneyHelper explains, “the higher your deposit, the less risky you are to lend to,” and that translates to cheaper mortgage rates moneyhelper.org.uk.

First-Time Buyer Schemes and Government Support

First-time buyers often have to work especially hard to raise a deposit. Fortunately, there are some schemes designed to help:

Lifetime ISA (LISA): A LISA allows eligible buyers (age 18–39) to save up to £4,000 per year towards their first home (up to £450,000 purchase price). The government adds a 25% bonus on contributions – up to £1,000 per year moneyhelper.org.uk. For example, saving £1,000 in a LISA gives you an extra £250 bonus. This can significantly boost your deposit over time.
Mortgage Guarantee Scheme (95% mortgages): Running until mid-2025, the UK government’s Mortgage Guarantee allows qualifying buyers (including first-timers and home-movers) to get a 95% loan (5% deposit) on certain homes. Lenders underwrite these mortgages with a government guarantee, reducing their risk moneyhelper.org.uk. The guarantee covers up to 95% of losses if the buyer defaults, making 5% deposit deals more widely available. Note that these mortgages are not necessarily cheap – you’ll still typically pay more than if you had a larger deposit.
Help to Buy (Equity Loan) – Wales: While England’s Help to Buy (20% equity loan with 5% deposit) ended in 2023, Wales still offers a similar shared equity scheme. Help to Buy – Wales supports new-build purchases (up to £300k) by requiring only a 5% deposit, with the Welsh Government providing a 20% interest-free loan on top of that moneyhelper.org.uk. The buyer then takes a mortgage on the remaining 75%. (Other regions have analogous schemes or shared ownership options.)
Shared Ownership: In shared ownership (available in parts of England, Wales, and Scotland), you buy a share of a property (often 25–75%) and pay rent on the rest. This reduces the deposit needed, since you only need to fund your share. You can often increase your share in 5% increments later (“staircasing”) to build ownership.

These schemes don’t eliminate the need for a deposit, but they can lower it or give bonuses. MoneyHelper notes that Government support includes savings bonuses (like LISAs) and alternate buying routes (shared ownership) to ease deposit saving moneyhelper.org.uk.

Saving for a Mortgage Deposit

Setting aside money for a deposit takes planning. Use the following strategies for saving for a mortgage deposit:

Set a clear target and plan: Figure out the property price range you’re aiming for and calculate the deposit (e.g. 5–20% of that price). Then work out a savings plan. As one example from MoneyHelper shows, to save £10,000 you could set aside about £278 per month for 3 years, £167 per month for 5 years, or £119 per month for 7 years moneyhelper.org.uk. Breaking the goal into a monthly target makes it more manageable.
Use a dedicated savings account: Open a separate account (or bank “pot”) just for your deposit. This keeps the money distinct and harder to spend. Compare interest rates: if you have a few years to save, a longer-term high-interest savings account (or ISA) may give better returns moneyhelper.org.uk. For shorter goals, an easy-access account is fine. Check price comparison sites (MoneySavingExpert, MoneySupermarket, Which?) to find accounts tailored for your needsmoneyhelper.org.uk.
Automate your savings: Set up a standing order to transfer a fixed amount into your deposit account right after payday moneyhelper.org.uk. This “pay yourself first” trick means you’re less tempted to spend what you’d otherwise save. Even small regular amounts add up; the example above showed how £119/m for 7 years hits £10k.
Take advantage of bonuses: If you’re eligible, use a Lifetime ISA as mentioned (25% bonus on savings) moneyhelper.org.uk. Also look for cash-back offers or help from family contributions if possible (some lenders allow gifts from parents toward the deposit).
Cut costs and boost income: Analyze your budget for any non-essential expenses to trim. Even small savings on daily spending can accelerate the deposit build-up. Consider extra income streams (bonuses, overtime, selling unused items, etc.) and funnel that into savings. The key is consistency and discipline.

By treating your deposit like a monthly “bill” you must save first, you’ll make steady progress. Tools like budgeting planners and savings calculators (e.g. MoneyHelper’s calculators) can also help you track your progress toward your deposit goal.

Benefits of a Larger Deposit

Putting down a bigger deposit has several advantages:

Lower interest rates: The main benefit is cost savings. Lenders see you as lower risk, so they offer cheaper rates. As MoneyHelper explains, larger deposits allow you to borrow less and usually get a better mortgage deal moneyhelper.org.ukmoneyhelper.org.uk. In practice, mortgages with low LTVs (high deposits) have the best rates. For example, recent data shows that deals at 60–75% LTV were offering under 4% interest, whereas a 90% LTV deal sat around 4.8%which.co.uk. Even moving from a 10% to a 20% deposit can shave significant points off your rate.
More deal options: Some mortgage products (especially the very cheapest or special first-time buyer deals) require higher deposits. By raising your deposit, you unlock a wider range of mortgages. MoneyHelper notes that larger deposits “give you access to a wider range of mortgage deals or lower interest rates”moneyhelper.org.uk. In contrast, small deposits (high LTV) often limit you to fewer, pricier products.
Smaller loan and payments: A bigger deposit means a smaller loan. This directly reduces your monthly mortgage payments and the total interest paid over the loan’s life. It also means you’ll owe less if house prices dip, giving you more financial security.
Equity and remortgage flexibility: Starting with substantial equity in your home can benefit you later. For instance, lenders are often willing to refinance (remortgage) at more favorable terms if you have high equity. It also gives you the option to raise funds against your home (e.g. for home improvements) more easily down the line.

In summary, every extra percentage you save boosts your mortgage deal. Even increasing your deposit from 5% to 10%, or 10% to 20%, can have a material impact on your costs and options moneyhelper.org.ukwhich.co.uk.

Improving Your Mortgage Eligibility

Besides saving a deposit, there are steps you can take to improve your mortgage application:

Clear debts and avoid new credit: Before applying, pay down credit cards, loans, or overdrafts. As MoneyHelper advises, clear existing debts and avoid taking on new credit so lenders see you as responsible with money moneyhelper.org.uk. Each lender will check your credit report, and a high debt-to-income ratio can limit how much you can borrow. Reducing debts improves affordability.
Check and fix your credit report: Obtain your credit report (via one of the UK credit reference agencies) and look for errors or outdated information. If you spot mistakes (e.g. incorrect late-payment markers), dispute them and get them corrected moneyhelper.org.uk. Lenders use your credit history to gauge risk, so a clean, accurate report can improve your chances and the interest rates offered.
Build a good credit history: If you’re young or haven’t used credit before, consider a small credit-building loan or credit card and repay it on time for a few months. Even having one or two well-managed credit products (and being on the electoral roll) can help establish your reliability.
Stable finances: Lenders prefer applicants with steady income and employment. If you’re self-employed, gather 2–3 years of accounts or tax returns. If on probation or recently changed jobs, try to wait until your position stabilises if possible. Keeping up with all bills (rent, utilities, phone, etc.) on time also signals reliability.
Use a mortgage adviser: A good broker or adviser can make a big difference. They know the market and can match you to lenders that suit your circumstances (small deposit, non-standard income, etc.). For example, Azembel Mortgage Adviser can help find deals for self-employed buyers or those with limited deposit. An adviser will also guide you through the paperwork and criteria.

By taking these steps, you show lenders you’re responsible and prepared. Even if your deposit is on the lower side, demonstrating good credit habits and stable finances can improve your eligibility and the terms you receive.

Get Personalised Advice from Azembel Mortgage Adviser

Saving for a mortgage deposit and finding the right deal can be complex. Putting together all the pieces – deposit size, government schemes, credit profile, and job stability – is easier with expert help. Azembel Mortgage Adviser has experience guiding buyers through every step: from figuring out how much deposit you need to finding the most suitable mortgage for your situation. If you’re unsure where to start or want tailored advice, contact Azembel Mortgage Adviser today. Our advisers can review your finances, explain your options, and help you make a plan to secure the home you want.

Take the next step: Reach out to Azembel Mortgage Adviser for a free consultation and get personalised guidance on your mortgage deposit and buying strategy.

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