In this guide
A common minimum deposit for standard residential mortgages is 5%: £12,500 on a £250,000 home. Some lenders offer sub-5% or no-deposit products with strict criteria, such as proven rental payment history; a family guarantor is not always required. Eligibility and affordability still need individual checks.
Your deposit size directly affects your loan to value ratio (LTV). The lower your LTV, the better the interest rates available to you, because the lender is taking on less risk.
| Deposit | LTV | What to expect |
|---|---|---|
| 5% | 95% | More limited choice of deals, generally higher rates |
| 10% | 90% | Noticeable rate drop compared to 95% |
| 15% | 85% | Further improvement, more lenders available |
| 25% | 75% | Access to the best rates on the market |
| 40% | 60% | Often among the lowest rates, subject to product and eligibility |
On a £200,000 mortgage over 25 years, the gap between a 95% LTV rate and a 75% LTV rate could save you over £100 per month.
- Gifts from family: A common option for first time buyers. The person gifting the money will need to sign a declaration confirming it is a gift and not a loan.
- Inheritance: Accepted by all lenders, though they may ask for proof of where the funds came from.
- Sale of another property: The equity you release can be used as a deposit on the next one.
- Savings accounts and ISAs: Including Lifetime ISAs, which add a 25% government bonus on savings up to £4,000 per year.
Important: Lenders need to see a clear trail of where your deposit came from. Large, unexplained deposits in your bank account will be questioned as part of anti money laundering checks.
- Set up a standing order into a dedicated savings account on payday
- Check Lifetime ISA eligibility: open at 18 to 39, contribute until 50, and use for a qualifying mortgaged first home costing up to £450,000 at least 12 months after the first payment. Other withdrawals before 60 usually incur a 25% charge
- Review your monthly outgoings and cancel subscriptions you no longer use
- Consider whether you can reduce your rent temporarily while you save
- If you receive a pay rise or bonus, put the extra towards your deposit
Not sure how much you need?
We can run through the numbers with you and show you exactly how different deposit sizes affect your monthly payments and the deals available.
Speak to us