Mortgage Deposits Explained: How Much Do You Really Need?
A complete guide to UK mortgage deposits, from the minimum 5% to the rates you unlock at 20% and beyond.
Surijit
Mortgage Adviser
For most people in the UK, saving a mortgage deposit is the single biggest barrier to homeownership. Your deposit is the lump sum you put down upfront when purchasing a property, and it directly determines your loan-to-value ratio (LTV), the range of mortgage products available to you, and the interest rate you will pay over the life of the loan. Whether you are a first-time buyer starting from scratch or a home mover looking to step up the ladder, understanding exactly how much you need to save is the essential first step in any property purchase.
In this guide we break down the main deposit tiers from 5% to 20% and above, explain how each level affects your mortgage rate, and walk through practical strategies for building your deposit faster. We also cover gifted deposits from family members, the government schemes still available in 2025 and 2026, and the additional costs you need to budget for on top of the deposit itself. By the end you will have a clear picture of what you need and a realistic plan for getting there.
Throughout the guide we have included links to our free LTV calculator, borrowing calculator, and stamp duty calculator so you can run the numbers for your own situation. If you would like personalised advice at any point, our team of mortgage advisers at Clearview compare deals from over 90 lenders and can help you find the best mortgage for your deposit size — get in touch to start a conversation.
How much deposit do you need?
The minimum deposit accepted by most UK mortgage lenders is 5% of the property price. On a home worth £250,000 that means saving at least £12,500. A 5% deposit gives you a 95% loan-to-value mortgage, which is the highest LTV most mainstream lenders will consider. While it is the fastest route onto the ladder, a smaller deposit does come with trade-offs in the form of higher interest rates and stricter affordability checks.
Putting down a larger deposit reduces the amount you need to borrow, which in turn lowers your LTV ratio. Lenders price their products in LTV bands, so moving from 95% down to 90%, 85%, or 80% LTV unlocks progressively better rates. The sweet spot for many buyers is 10–15%, which significantly improves the deals available without requiring years of additional saving.
Deposit tiers at a glance
5%
Minimum deposit (95% LTV)
£12,500 on a £250k home — widest access, but highest rates
10%
Competitive tier (90% LTV)
£25,000 on a £250k home — noticeably better rate options
15%
Strong position (85% LTV)
£37,500 on a £250k home — lower payments, more lender choice
20%+
Best rates (80% LTV or below)
£50,000+ on a £250k home — cheapest deals on the market
Why does 10% make such a difference?
The gap between 95% LTV and 90% LTV products is one of the biggest jumps in rate pricing across the mortgage market. Moving from a 5% deposit to a 10% deposit can reduce your interest rate by 0.3–0.6 percentage points, which on a £200,000 mortgage could save you over £1,500 per year in repayments.
How your deposit affects your mortgage rate
The relationship between your deposit and your mortgage rate comes down to risk. The more you borrow relative to the property value, the riskier the loan is for the lender. If house prices fall, a borrower with a 95% LTV mortgage could quickly end up in negative equity, while someone at 75% LTV has a much larger buffer.
This is why lenders structure their pricing in LTV bands. A 5-year fixed rate at 90% LTV might sit around 4.5–5.0%, whereas the same product at 75% LTV could be 3.8–4.2%. Over a 25-year mortgage that difference amounts to tens of thousands of pounds in total interest. Use our repayment calculator to see how rates change your monthly cost.
90% LTV vs 75% LTV on a £250,000 property
90% LTV (£25k deposit)
- Borrow £225,000 from the lender
- Indicative 5-year fixed rate: ~4.7%
- Approximate monthly repayment: £1,275
- Total interest over 25 years: ~£157,000
75% LTV (£62.5k deposit)
- Borrow £187,500 from the lender
- Indicative 5-year fixed rate: ~4.0%
- Approximate monthly repayment: £990
- Total interest over 25 years: ~£109,000
Tips for saving a mortgage deposit
Saving for a deposit takes discipline and planning, but there are practical steps you can take to speed things up. The first is to set a clear target. Use a borrowing calculator to work out how much you need for the property price range you are looking at, then break it into monthly savings goals.
The LISA penalty to watch for
If you withdraw from a Lifetime ISA for anything other than buying your first home (or retirement after age 60), you will face a 25% penalty on the amount withdrawn. That means you lose the government bonus and a portion of your own savings. Only use a LISA if you are confident you will be purchasing a qualifying property worth £450,000 or less.
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Gifted deposits and family support
A gifted deposit is money given to you by a family member, usually a parent or grandparent, to help you buy a property. Gifted deposits are common in the UK and most mainstream lenders accept them, provided certain conditions are met. If you are a first-time buyer relying on family help, it is important to understand what lenders require.
Gifted deposit letter
- Must confirm the money is a gift, not a loan
- Must state the donor has no interest in the property
- Must confirm there is no expectation of repayment
- Signed by the person giving the gift, with their full name and address
Proof of source of funds
- Lenders require evidence of where the money came from (anti-money laundering rules)
- Bank statements showing the savings or account the funds are held in
- If from a property sale: completion statement from the solicitor
- If from investments: portfolio statements or sale confirmations
Who can give a gifted deposit?
- Parents and grandparents are accepted by virtually all lenders
- Siblings and other close family members are accepted by most lenders
- Gifts from friends or non-family members are accepted by fewer lenders
- Some lenders require the buyer to contribute a minimum of their own funds as well
Inheritance tax implications
Gifted deposits are not subject to income tax, but they may be subject to inheritance tax if the donor passes away within seven years of making the gift. Amounts above the £325,000 nil-rate band are potentially taxable on a sliding scale. It is worth the donor seeking independent financial advice if the gift is substantial.
Government schemes that help with deposits
Several government-backed schemes can reduce the deposit you need or help you save faster. While the Help to Buy equity loan closed to new applicants in March 2023, other programmes remain available. Our help-to-buy and shared ownership guide covers these in more detail.
Lifetime ISA (LISA)
- Save up to £4,000/year with a 25% government bonus (up to £1,000 free per year)
- Property must be worth £450,000 or less and bought with a mortgage
- Must be aged 18–39 to open; account must be open 12 months before use
- Maximum lifetime bonus of £32,000 if you save the maximum from age 18 to 50
Shared Ownership
- Buy a 25–75% share of a property and pay rent on the rest
- Deposit is only needed on the share you purchase (e.g. 5% of a 25% share)
- Available through housing associations on new-build and resale homes
- Staircase to full ownership over time as your finances allow
First Homes scheme
- New-build homes sold at a minimum 30% discount to market value
- Price after discount capped at £250,000 (or £420,000 in London)
- Discount locked into the property title for all future sales
- Must be a first-time buyer with household income under £80,000 (£90,000 in London)
Mortgage Guarantee Scheme
- Government backs lenders offering 95% LTV mortgages on properties up to £600,000
- Increases the number of 5% deposit deals available on the market
- Not a direct buyer scheme — you apply for a 95% mortgage as normal
- Extended to June 2025 and expected to continue supporting high-LTV lending
Other costs to budget for alongside your deposit
Your deposit is the largest upfront cost, but it is not the only one. Many buyers are caught out by the additional expenses that come with purchasing a property. Building these into your budget from the start will avoid unpleasant surprises — see our stamp duty guide for a full breakdown of what you will owe.
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“Clearview made the whole mortgage process so much less stressful. Ali explained every step, found us a rate we didn’t think was possible, and kept us updated throughout. We completed in just five weeks.”
Sarah Mitchell
First-Time Buyer
“We were on our lender’s SVR paying way too much. Clearview found us a fixed deal that saved us over £300 a month. The whole switch was handled for us — couldn’t recommend them enough.”
James & Priya Patel
Remortgage
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David Thompson
Self-Employed
“I’ve used Clearview for three BTL purchases now. They understand the portfolio landlord criteria inside out and always find competitive products. Professional, fast, and genuinely knowledgeable.”
Emma Collins
Buy-to-Let Investor
“Selling and buying at the same time felt overwhelming, but Clearview coordinated everything with our solicitor and estate agent. They even helped us port our existing deal. Brilliant service from start to finish.”
Michael & Laura Reed
Moving Home
“I had a CCJ from years ago and thought I’d never get a mortgage. Clearview matched me with a specialist lender and I’m now a homeowner. They treated me with respect and never judged my situation.”
Rachel Okonkwo
Bad Credit Mortgage
“Clearview made the whole mortgage process so much less stressful. Ali explained every step, found us a rate we didn’t think was possible, and kept us updated throughout. We completed in just five weeks.”
Sarah Mitchell
First-Time Buyer
“We were on our lender’s SVR paying way too much. Clearview found us a fixed deal that saved us over £300 a month. The whole switch was handled for us — couldn’t recommend them enough.”
James & Priya Patel
Remortgage
“As a contractor I’d been turned down twice before. Clearview knew exactly which lenders to approach and how to present my income. Got approved first time with a great rate. Absolute lifesavers.”
David Thompson
Self-Employed
“I’ve used Clearview for three BTL purchases now. They understand the portfolio landlord criteria inside out and always find competitive products. Professional, fast, and genuinely knowledgeable.”
Emma Collins
Buy-to-Let Investor
“Selling and buying at the same time felt overwhelming, but Clearview coordinated everything with our solicitor and estate agent. They even helped us port our existing deal. Brilliant service from start to finish.”
Michael & Laura Reed
Moving Home
“I had a CCJ from years ago and thought I’d never get a mortgage. Clearview matched me with a specialist lender and I’m now a homeowner. They treated me with respect and never judged my situation.”
Rachel Okonkwo
Bad Credit Mortgage
“Clearview made the whole mortgage process so much less stressful. Ali explained every step, found us a rate we didn’t think was possible, and kept us updated throughout. We completed in just five weeks.”
Sarah Mitchell
First-Time Buyer
“We were on our lender’s SVR paying way too much. Clearview found us a fixed deal that saved us over £300 a month. The whole switch was handled for us — couldn’t recommend them enough.”
James & Priya Patel
Remortgage
“As a contractor I’d been turned down twice before. Clearview knew exactly which lenders to approach and how to present my income. Got approved first time with a great rate. Absolute lifesavers.”
David Thompson
Self-Employed
“I’ve used Clearview for three BTL purchases now. They understand the portfolio landlord criteria inside out and always find competitive products. Professional, fast, and genuinely knowledgeable.”
Emma Collins
Buy-to-Let Investor
“Selling and buying at the same time felt overwhelming, but Clearview coordinated everything with our solicitor and estate agent. They even helped us port our existing deal. Brilliant service from start to finish.”
Michael & Laura Reed
Moving Home
“I had a CCJ from years ago and thought I’d never get a mortgage. Clearview matched me with a specialist lender and I’m now a homeowner. They treated me with respect and never judged my situation.”
Rachel Okonkwo
Bad Credit Mortgage
“Clearview made the whole mortgage process so much less stressful. Ali explained every step, found us a rate we didn’t think was possible, and kept us updated throughout. We completed in just five weeks.”
Sarah Mitchell
First-Time Buyer
“We were on our lender’s SVR paying way too much. Clearview found us a fixed deal that saved us over £300 a month. The whole switch was handled for us — couldn’t recommend them enough.”
James & Priya Patel
Remortgage
“As a contractor I’d been turned down twice before. Clearview knew exactly which lenders to approach and how to present my income. Got approved first time with a great rate. Absolute lifesavers.”
David Thompson
Self-Employed
“I’ve used Clearview for three BTL purchases now. They understand the portfolio landlord criteria inside out and always find competitive products. Professional, fast, and genuinely knowledgeable.”
Emma Collins
Buy-to-Let Investor
“Selling and buying at the same time felt overwhelming, but Clearview coordinated everything with our solicitor and estate agent. They even helped us port our existing deal. Brilliant service from start to finish.”
Michael & Laura Reed
Moving Home
“I had a CCJ from years ago and thought I’d never get a mortgage. Clearview matched me with a specialist lender and I’m now a homeowner. They treated me with respect and never judged my situation.”
Rachel Okonkwo
Bad Credit Mortgage
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