How Much Deposit Do I Need for My First Mortgage?
Buying your first home is an exciting step, but one of the first questions you’ll probably ask is, how much deposit do I need for my first mortgage?
Understanding the deposit size helps you plan your finances better and boosts your chances of mortgage approval.
In this post, we’ll break down what you need to know about deposits for different types of mortgages in the UK, including residential and buy-to-let options, as well as fixed and variable mortgage deals.
What Is a Mortgage Deposit?
A mortgage deposit is the amount of money you pay upfront when purchasing a property.
It’s expressed as a percentage of the property’s value.
For example, if you’re buying a home worth £200,000 and you have a 10% deposit, you’ll need £20,000 as your deposit.
Your deposit size directly affects the amount you need to borrow and can influence the mortgage interest rate you’re offered.
How Much Deposit Do You Need for a First Residential Mortgage?
Minimum Deposit Requirements
Most first-time buyers in the UK will need at least a 5% to 10% deposit of the property’s purchase price for a residential mortgage.
5% deposit:
Some lenders offer first-time buyer schemes with just a 5% deposit, especially with government-backed schemes like Help to Buy.
10% deposit:
This is more common and gives you access to better mortgage deals, with lower interest rates.
15–25% deposit:
The more you can put down, the more options you may have for competitive mortgage rates.
Example: Buying Your First Home
Sarah wants to buy her first flat costing £180,000.
She has saved £15,000 for the deposit, which is roughly 8.3%.
Sarah looks for lenders that accept deposits between 5–10%. If she qualifies, she might get a mortgage for around £165,000.
If Sarah had saved only £9,000, which is 5%, she would have fewer lender options and might get a higher mortgage rate or need a guarantor.
Deposits for Buy-to-Let Mortgages
If you’re thinking about buying a property to rent out, the deposit requirements are different.
Typical Deposit for Buy-to-Let
Most lenders require a bigger deposit for buy-to-let mortgages than for residential ones.
The typical minimum is around 25% of the property’s value.
This higher deposit reduces the lender’s risk because buy-to-let can be riskier from their perspective.
Example: Buy-to-Let Deposit
John wants to buy a buy-to-let property valued at £150,000.
With a 25% deposit, he’ll need £37,500 upfront.
John should also budget for additional costs like stamp duty, legal fees, and property maintenance.
Fixed vs Variable Mortgages: Does the Deposit Change?
The size of your deposit doesn’t usually affect whether you choose a fixed mortgage or a variable mortgage.
However, it affects your loan-to-value ratio, also known as LTV, which helps determine the interest rate.
Loan-to-Value Explained
Loan-to-value is the percentage of the property’s value you borrow.
For example, a 10% deposit means a 90% LTV mortgage.
How Deposit Affects Mortgage Rates
Lower deposits, higher LTV:
Lenders see this as riskier. You may have to pay a higher interest rate.
Higher deposits, lower LTV:
Usually get better mortgage rates, whether fixed or variable.
Practical Tips for Saving Your First Mortgage Deposit
Saving for a deposit can feel challenging, but breaking it down into small steps makes it achievable.
1. Set a Realistic Savings Goal
For example, if you aim for a 10% deposit on a £200,000 property, that’s £20,000.
Create a monthly saving plan and track your progress.
2. Use a Lifetime ISA
This government-backed account lets you save up to £4,000 a year, with a 25% bonus.
That means a £1,000 bonus per year on full contributions, boosting your deposit savings.
3. Reduce Unnecessary Spending
Cut back on luxuries or subscriptions you don’t use.
Every little saving adds up.
4. Consider Gifted Deposits
Sometimes family members may be willing to help with your deposit.
Ensure you understand lender requirements about gifted deposits, as some may require a formal letter.
Can I Get a Mortgage with No Deposit?
Generally, no.
UK mortgage lenders typically require a deposit to reduce their lending risk.
However, in rare cases, with excellent credit, a guarantor mortgage, or certain government schemes, you might get close to a zero-deposit mortgage.
These options come with risks and conditions and are less common.
Other Costs to Consider Alongside Your Deposit
Your mortgage deposit is just one part of the upfront costs.
Remember to budget for:
Stamp Duty Land Tax:
May apply depending on property price and other conditions.
Legal fees:
Solicitor or conveyancer costs for handling your purchase.
Valuation and survey fees:
To make sure your property is in good condition.
Mortgage arrangement fees:
Some lenders charge these for setting up your mortgage.
Moving costs:
Removal vans, utility setup, and any repairs or furniture.
Summary: How Much Deposit Do You Need for Your First Mortgage?
| Mortgage Type | Typical Minimum Deposit | Notes |
|---|---|---|
| Residential First Time Buyer | 5% to 10% | More deposit usually means better interest rates. |
| Buy-to-Let | Around 25% | Higher deposit due to increased lender risk. |
| Fixed or Variable Mortgage | Deposit size doesn’t vary | Influences loan-to-value and mortgage rates. |
| No Deposit Mortgages | Rare and high risk | Usually require guarantors or government schemes. |
The exact amount depends on the property price, lender requirements, and your personal financial circumstances.
Ready to Take the Next Step?
If you’re unsure how much deposit you’ll need or want to explore mortgage options that suit your budget, the expert team at BSL Financials is here to help.
We can guide you through the process, answer your questions, and help you understand your choices, all without giving personal regulated advice.
Get in touch today to discuss your mortgage goals and start your journey to homeownership with confidence.
