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 5% or more, with the recommended deposit amount being 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 remaining percentage with a mortgage.

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. 

In November 2019, the average property price in the UK was around £235,000.² So if you were looking to buy a home at this price, then you’d need at least £11,700 saved for the minimum 5% deposit.

However, the bigger the deposit the better. 

A larger deposit means your monthly mortgage repayments will be smaller and you’ll have a bigger choice of deals.

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

With any 100% mortgage you can also avoid a deposit - however there are downsides to this. See our section on ‘Can I get a mortgage with no deposit?’ for the details.

LTV vs. monthly repayments - infographic

How to save for a house deposit

Before you begin saving for a deposit, it’s helpful to think about a few things first.

These include:

  • 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 (5%, 10%, 15% etc.)

Step 1: Assess your finances

Consider what your income and outgoings are each month.

What are your regular expenses? Where can you cut costs in order to put more money aside?

Looking through your bank statements and listing what expenses you have can help you get a clearer picture of where your money goes.

It’s also worth looking at how you can cut costs in the short term, letting you save more for a deposit.

You can do this by:

  • reducing everyday spending

  • reducing your bills (switch energy/broadband/mobile providers and/or cancel unused subscriptions etc.)

  • using budgeting or money saving apps

  • moving back in with parents or renting somewhere cheaper

Step 2: Decide how much to save

Keeping in mind what money you have coming in and out every month, have a think about what kind of property you’re interested in buying, what it’s likely to cost and how big a deposit you want to save.

Remember: The bigger the deposit the better. 

You could go for the smaller 5% deposit, which would mean you need to save less but you’d pay more on your mortgage each month. Whereas a slightly bigger deposit will mean you pay less each month.

Step 3: Find out what you could afford

Use a mortgage affordability calculator to find out  how much you could borrow for a mortgage.

Our affordability calculator will take into account the following:

  1. your yearly salary (and that of your friend or partner if applicable)

  2. your deposit amount

  3. your average monthly outgoings

You could calculate your potential loan amount after you’ve saved a deposit, but doing it beforehand will help you get an idea of how big a mortgage you can take out when you’re ready. 

It’ll also allow you to figure out whether the estimate is enough to buy the kind of home you want, or whether you should keep saving to buy a more expensive property.

Keep in mind that an affordability calculator can only give you a general 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 roughly how much you intend to save towards a deposit, you should consider putting it in a savings account. 

Here are a some options:

Set up a direct debit transfer or standing order to move a certain amount of money into your ISA or savings account every payday. This way you won’t be tempted to spend the money you should be saving.

Step 5: Start saving

Sticking to budgets and plans isn’t easy. But remember that the end goal is to buy the home of your dreams, and having a healthy deposit to go towards it will be a huge benefit in the long run.

How long does it take to save a deposit?

The current average UK house price is around £235,000. And it takes on average 10 years for single first time buyers to save a 15% deposit.³

It’s even longer - 15 years - for Londoners.

Although in most cases you only need to have at least a 5% deposit, the average deposit people put down is 15%. So a 15% deposit of a £235,000 property is £35,250. 

However, there’s no one size fits all in terms of the time it takes to save for a deposit, as it depends on a number of things:

  • your income

  • potential financial help from family

  • how much you aim to save in total

  • how much you put away each week, month or year

Getting a mortgage with a small deposit

It’s recommended you put down at least a small deposit, as it means you’ll get a wider range of mortgages to choose from.

So it’s worth thinking about saving more money for a bit longer before buying if it means you’ll have a bigger deposit.

Can I get a mortgage with no deposit?

You can get a mortgage with no deposit. This is called a 100% LTV mortgage, but they’re not that common.

The most likely way to get a no deposit mortgage is by getting a guarantor mortgage

For a guarantor mortgage you’ll need to have a family member or friend (who owns a property) willing to guarantee your mortgage repayments on your behalf. 

This means that if you miss any monthly mortgage payments your guarantor is financially liable.

To learn more, check out our guarantor mortgage guide.

Alternatively, 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 will charge a higher rate

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

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

  • most lenders are looking for a close to perfect credit score

  • risk of negative equity

Negative equity

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

When you borrow 100% of the value of a property, there’s more of a risk of falling into negative equity if house prices drop.  

Negative equity is when your property’s value is less than the amount you borrowed for it. You’d still be expected 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 especially hard if you're on a lower income, buying alone or simply a young first time buyer.

Luckily there are different ways to get help towards your house deposit.

Help from parents

As well as guarantor mortgages (see above), you can also get help from family or friends if they’re able to gift you your deposit or part of it.

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

Our first time buyer guide has more information about how your parents can help with a mortgage deposit.

Government homebuying schemes

There are a number of government homebuying schemes to help you get on the property ladder.

Some of the most popular schemes available are:

Find out more with 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.

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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.

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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