What is a mortgage deposit?

A mortgage deposit is a lump sum of money you pay towards your home upfront. 

This is a percentage of the total house price and is usually at least 5%. The recommended deposit amount is about 20%.¹ 

Unless you have the money to pay the full price of the home you wish to buy, you’ll pay for the rest with a mortgage.

LTV vs. monthly repayments - infographic

How much deposit do I need to buy a house?

Usually you’ll need to put down a deposit of at least 5% of the property’s value. This will mean you have a 95% LTV mortgage.

Coronavirus has led to most lenders only accepting deposits of at least 10%. If you have a deposit of 5% you may find it very hard to get a mortgage.

In November 2019, the average property price in the UK was around £235,000.²

If you were looking to buy a home at this price, you’d need at least £11,700 saved for a 5% deposit. Or £23,400 for a 10% deposit.

The bigger the deposit the better.

A bigger deposit will give you more deals to choose from and lower monthly mortgage payments.

The stamp duty holiday until the end of March 2021 means that you do not pay stamp duty on houses under £500,000.

This could save you up to £15,000 in stamp duty that you could use for your deposit.

With some government schemes, such as Right to Buy, you may not need to save a deposit. This is because you could use the discount offered by the scheme to cover the deposit.

With any 100% mortgage you can also avoid a deposit. This can be negative, learn how to get a mortgage with no deposit.

How to save for a house deposit

Before you begin saving for a deposit, think about:

  • how much you can save each month

  • where you want to buy and how much a property costs there

  • how you’ll save

  • how big a deposit you want to save such as 5%, 10%, 15%

Step 1: Assess your finances

Think about what you get paid and spend each month.

What do you buy often? Where can you cut costs so you can save more money.

Look through your bank statements and list what you pay for. This can help you get a clearer idea of where your money goes.

Look at how you can cut costs in the short term, letting you save more for a deposit.

You can do this by:

  • cutting down how much you spend each day

  • reducing your bills. You can switch energy, broadband or mobile providers or cancel unused subscriptions

  • using apps to budget or save money

  • moving back in with parents or renting somewhere cheaper

Step 2: Decide how much to save

Think about what money you have coming in and going out every month and then think about:

  • what kind of property you’re interested in buying

  • what it’s likely to cost

  • how big a deposit you want to save

The bigger the deposit the better.

You could go for the smaller 5% deposit. This would mean you need to save less but you’d pay more on your mortgage each month.

A bigger deposit will mean you pay less each month.

Step 3: Find out what you could afford

Use a mortgage calculator to see how much you could borrow for a mortgage.

Our calculator will look at:

  • how much you and the person you're getting a mortgage with earn a year

  • your deposit amount

  • what you spend on average a month

You could work out how much you could borrow after you've saved a deposit. But doing it before this will help you get an idea of how big a mortgage you can take out when you’re ready.

It also lets you to figure out if the estimate is enough to buy the kind of home you want. Or if you should keep saving to buy a more expensive property.

An affordability calculator can only give you an estimate of what you could borrow.

Lenders will need more information when they come to assess how much you could borrow.

Step 4: Decide how you'll save

Once you’ve decided how much you plan to save for a deposit, you should think about putting it in a savings account.

You can put savings into a:

Set up a direct debit or standing order to put some money into your ISA or savings account every payday. This will make it less likely that you'll spend the money you should be saving.

Step 5: Start saving

Sticking to budgets and plans is not easy.

It's worth it in the long run to get a healthy deposit to reach your goal of buying your own home.

Infographic showing the lockdown savings of working from home instead of commuting to London

Saving for a deposit during lockdown

You could have saved if you worked from home during the coronavirus lockdown instead of travelling to London. You could've saved an average of £1,627 towards the deposit.

We surveyed almost 80 locations within a 45 commute of central London. This was to see how much first time buyers could save by working from home instead of buying a monthly train ticket to London. We looked at the 5 months between April and August.

We then checked the average asking price for 2 bedroom properties in those locations.

At the moment, you'd need a 10% deposit for one of these properties. It's very hard to get a 5% deposit mortgage right now.

The largest lockdown savings were for first time buyers living in Didcot, Oxfordshire. If you worked from home between April and August, you would've saved £2,594 on your train tickets to London. That's almost 11% of the deposit needed to buy a property there.

In Milton Keynes, first time buyers could've saved £2,573 by not commuting to London. This is over 12% of the deposit needed to buy a 2 bedroom property there.

In Oxshott, Surrey you would've saved 1.3% of the £93,000 deposit you'd need to buy a 2 bedroom property there.

How much you could save by working from home instead of commuting

Here are 76 commuter locations within 45 minutes of London.

These are the savings by not commuting into London for 5 months between April and August. And the percentage towards a 10% deposit on an average 2 bedroom property in the area.

  1. Milton Keynes: £2,573 — 12.14%

  2. Bedford: £2,387 — 11.83%

  3. Didcot: £2,594 — 10.96%

  4. Chatham: £2,099 — 10.48%

  5. Witham: £2,254 — 10.26%

  6. Luton: £2,125 — 10.09%

  7. Biggleswade: £2,300 — 9.93%

  8. Arlesey: £2,108 — 8.77%

  9. Reading: £2,273 — 8.70%

  10. Paddock Wood: £2,264 — 8.29%

  11. Stevenage: £1,903 — 8.12%

  12. Chelmsford: £2,020 — 7.42%

  13. Farnborough: £1,981 — 7.34%

  14. Crawley: £1,734 — 7.24%

  15. Wickford: £1,884 — 7.19%

  16. Rayleigh: £1,987 — 7.13%

  17. Bishop's Stortford: £2,004 — 6.98%

  18. High Wycombe: £1,811 — 6.95%

  19. Baldock: £2,195 — 6.84%

  20. Three Bridges: £1,640 — 6.78%

  21. Hitchin: £2,006 — 6.57%

  22. Laindon: £1,450 — 6.53%

  23. Tring: £2,076 — 6.00%

  24. Benfleet: £1,734 — 6.31%

  25. Hemel Hempstead: £1,834 — 6.31%

  26. Swanscombe: £1,574 — 6.30%

  27. Sawbridgeworth: £1,895 — 6.13%

  28. Basildon: £1,450 — 6.09%

  29. Harlow: £1,701 — 5.99%

  30. Tilbury: £1,208 — 5.77%

  31. Tonbridge: £1,699 — 5.74%

  32. Welwyn Garden City: £1,488 — 5.72%

  33. Purfleet: £1,208 — 5.53%

  34. Horley: £1,453 — 5.40%

  35. Leigh-on-sea: £1,734 — 5.31%

  36. Sevenoaks: £1,780 — 5.19%

  37. Billericay: £1,774 — 5.09%

  38. Ingatestone: £1,799 — 5.05%

  39. Broxbourne: £1,313 — 5.04%

  40. Berkhamsted: £1,932 — 4.95%

  41. Slough: £1,338 — 4.81%

  42. Grays: £1,208 — 4.77%

  43. Swanley: £1,340 — 4.69%

  44. Guildford: £1,841 — 4.67%

  45. Dartford: £1,261 — 4.66%

  46. Shenfield: £1,553 — 4.66%

  47. Redhill: £1,396 — 4.62%

  48. Maidenhead: £1,572 — 4.37%

  49. Ware: £1,340 — 4.25%

  50. St. Albans: £1,782 — 4.15%

  51. Erith: £1,027 — 4.08%

  52. Amersham: £1,807 — 3.99%

  53. Brentwood: £1,359 — 3.90%

  54. Staines: £1,331 — 3.82%

  55. Otford: £1,780 — 3.79%

  56. Waltham Cross: £1,000 — 3.78%

  57. Rickmansworth: £1,379 — 3.58%

  58. Cheshunt: £1,054 — 3.52%

  59. Chorleywood: £1,379 — 3.37%

  60. Egham: £1,404 — 3.33%

  61. Caterham: £975 — 3.27%

  62. Walton-on-Thames: £1,252 — 3.25%

  63. Harpenden: £1,945 — 3.23%

  64. Taplow: £1,521 — 3.18%

  65. Windsor: £1,459 — 3.14%

  66. Bushey: £1,267 — 3.03%

  67. Gerrards Cross: £1,344 — 2.98%

  68. Potters Bar: £1,096 — 2.98%

  69. Weybridge: £1,371 — 2.95%

  70. Borehamwood: £975 — 2.90%

  71. Oxted: £1,162 — 2.88%

  72. Orpington: £1,026 — 2.80%

  73. Virginia Water: £1,509 — 2.52%

  74. Beaconsfield: £1,619 — 2.37%

  75. Epsom (Surrey): £1,039 — 2.29%

  76. Esher: £1,096 — 2.11%

  77. Oxshott: £1,225 — 1.32%

How long does it take to save a deposit?

The current average UK house price is around £235,000.

It takes on average 10 years for a single first time buyer to save a 15% deposit.³

It’s 15 years for people buying in London.

In most cases you only need to have at least a 5% deposit but the average deposit people put down is 15%.

A 15% deposit of a £235,000 property is £35,250.

The time it takes to save for a deposit depends on:

  • how much you earn

  • any financial help from family

  • the total you want to save

  • how much you to save each week, month or year

Getting a mortgage with a small deposit

It's a good idea to put down at least a small deposit so you have more mortgages to choose from.

It's a good idea to save more for a bit longer before you buy so you have a bigger deposit.

Can I get a mortgage with no deposit?

You can get a mortgage with no deposit but they're not common. This is a 100% LTV mortgage.

You're more likely to get a no deposit mortgage by getting a guarantor mortgage.

For a guarantor mortgage you’ll need to have a family member or friend who will guarantee the payments for you. The guarantor will need to own their own property.

If you miss any mortgage payments your guarantor is responsible.

Learn more about a guarantor mortgage.

Some lenders, like Kent Reliance, offer 100% mortgages on the shared ownership scheme.

The downside of no deposit mortgages

There are drawbacks to choosing 100% mortgage:

  • lenders charge a higher rate

  • your monthly repayments are higher than they would be with a larger deposit

  • you’ll pay more in total than you would with a larger deposit because of the amount of interest you’ll have to pay

  • lenders will look for an almost perfect

  • risk of negative equity

Negative equity

If you do go for a 100% mortgage, remember that there can be a higher financial risk.

You're more likely to fall into negative equity if house prices drop if you borrow 100% of the property value.

Negative equity is when your property’s value is less than the amount you borrowed for it. You’d still have to pay back the amount you agreed on when you bought it.

How to get help with a house deposit

With house prices so high, it's not easy to save for a deposit.

It can be even harder if you're on a low income, buying alone or are a young first time buyer.

There are different ways to get help towards your house deposit.

Help from parents

As well as guarantor mortgages, family or friends can also help by gifting you your deposit or part of it.

You may also be able to borrow from your parents, and pay them back later.

Learn more about how parents can help with a mortgage deposit in our first time buyer guide.

Government homebuying schemes

There are many government schemes to help you buy a home.

Some of the most popular schemes are:

Learn more in our government schemes guide.

Do I need a deposit to buy my council house?

Some lenders might ask for a deposit if you want to buy your council property.

Others let you use the discount you get with Right to Buy for a deposit.

Find out how you can buy your council house in our Right to Buy guide.

All mortgage guides, calculators and deals

Sources

¹ Money Advice Service: How much deposit do I need for a mortgage?

² Land Registry: UK House Price Index

³ Which?: First-time buyers face decade-long wait to save a mortgage deposit

Trussle holding phone icon

Get a mortgage with Trussle today

  • Fee-free online mortgage broker

  • Rated 4.9/5 on Trustpilot - the UK's top rated online mortgage broker

  • Thousands of deals from 90 lenders

  • Straightforward online application process

  • No waiting for appointments

  • No paperwork

  • Free ongoing mortgage monitoring

Your home could be repossessed if you don't keep up repayments on your mortgage.

You may have to pay an early repayment charge to your existing lender if you remortgage.

What people are saying about Trussle...