How Much Deposit Do You Need for a Mortgage UK?.

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.

If you can reach 20% or more, you will be in one of the most competitive LTV bands on the market. Monthly repayments drop noticeably, and you build equity in the property faster. Of course, saving 20% on a £300,000 home means putting aside £60,000, which is out of reach for many buyers without family support or a long savings timeline.

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.

It is worth noting that the biggest rate improvements come in the early LTV bands. Going from 95% to 90% saves more per percentage point than going from 75% to 70%. For this reason, even a small top-up to your deposit can have a disproportionately large impact on what you pay each month.

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 calculator to work out how much you need for the property price range you are looking at, then break it into monthly savings goals.

A Lifetime ISA is one of the most powerful tools available to first-time buyers under 40. You can save up to £4,000 per year and the government adds a 25% bonus on top, giving you up to £1,000 in free money each year. Over four years that could be £4,000 in bonus alone.

Beyond dedicated savings accounts, review your monthly spending honestly. Cutting back on discretionary spending, switching utility providers, reducing subscription services, and redirecting even £200–£300 a month into savings can add up to £3,600 per year. Many successful savers also consider temporary lifestyle changes such as moving to cheaper accommodation or picking up additional income.

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.

The person giving the gift will need to sign a gifted deposit letter confirming the money is a gift and not a loan, that they have no interest in the property, and that there is no expectation of repayment. Lenders will also need to see evidence of the source of funds for anti-money laundering purposes.

Some lenders require the buyer to contribute at least some of their own funds alongside the gift, while others will accept 100% gifted deposits. Your mortgage adviser can help you identify which lenders are most flexible in this area.

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.

Shared Ownership lets you buy a share of a property, typically between 25% and 75%, and pay rent on the remainder. Because your deposit is a percentage of the share you buy rather than the full property value, it dramatically reduces the amount you need upfront. On a £250,000 home with a 25% share, a 5% deposit would be just £3,125.

The First Homes scheme offers new-build properties at a minimum 30% discount to local first-time buyers. The discount is written into the title and passed on to future buyers. Eligibility criteria apply, including household income caps and local connection requirements in some areas.

The Mortgage Guarantee Scheme encourages lenders to offer 95% LTV mortgages by providing a government guarantee on the portion of the loan above 80% LTV. It is not a scheme you apply for directly; rather, it increases the number of 5% deposit products available on the market.

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.

Solicitor and conveyancing fees typically run between £1,000 and £1,800 including disbursements. A homebuyer’s survey costs £300–£600, while a full building survey on an older property can be £500–£1,000. Some lenders charge arrangement fees of £500–£2,000 for their most competitive rates, though these can often be added to the mortgage balance.

Stamp duty is another significant cost for buyers in England and Northern Ireland. First-time buyers pay no stamp duty on the first £425,000 of a property purchase, and a reduced rate on the portion between £425,001 and £625,000. Home movers pay stamp duty from £250,001 upwards at standard rates.