How Much Deposit Do You Need For A House?

One of the most important questions people might have when buying a house, especially for the first timer, is how much deposit do I need? In this blog we will discuss standard deposit amounts for buying property, the different types of mortgage you can access and how this can affect the deposit required, deposits for first-time buyers, and more.

Table of Contents

What is a Mortgage Deposit?
How Much Deposit Do I Need?
Can I Buy a House with a 15k Deposit?
Can I Buy a House With No Deposit?
How Much Deposit Do I Need as a First-Time Buyer?
Different Types of Mortgages

What is a Mortgage Deposit?

If you are buying a house and plan to pay for it using a mortgage, you need to provide a deposit. A deposit is an upfront payment that is calculated as a percentage of the property’s value. So, say if you wanted to purchase a property that is £200,000, then your mortgage provider will ask you to provide a percentage of this amount, so say they asked for a 10% deposit, you would need to provide £20,000. The deposit for a property determines the LTV or loan-to-value ratio of the mortgage. The larger the deposit you can provide, the lower the LTV will be. This means you can access lower mortgage interest rates, which is a better deal for you. It is therefore advantageous to have more money that you can put towards your deposit.

How Much Deposit Do I Need?

As the mortgage deposit is calculated based on the value of the property you want to buy, the amount will vary. Most mortgages offered to regular buyers who want to buy a house to live in will ask for a deposit of between 5% and 15% to secure a mortgage. Mortgages are offered by money lenders like banks and building societies, who you can approach directly or you can ask a mortgage broker to find the best deal for you based on your income and financial situation. The larger the deposit you can provide, the less money you will need to borrow from a mortgage provider. This means you will have access to a wider range of mortgages, better mortgage rates, and ultimately pay less per month in repayments.

Can I Buy a House with a 15k Deposit?

Yes, you can buy a house with a deposit of £15,000, provided that this meets the mortgage lenders’ requirements based on the property’s value. So for a house that is valued at £150,000, 15k represents a 10% deposit which is quite respectable and will give you access to a few different mortgage products. If the house is worth more, say £300,000, then a 15k deposit would only be 5% of the property’s value, reducing your mortgage options.

Can I Buy a House With No Deposit?

Yes, you can in theory buy a house with zero deposit if you find a mortgage lender who is willing to provide you with a 100% mortgage, or enter into a different type of mortgage, i.e. a guarantor mortgage or a family offset mortgage. 100% mortgages were more common before the recession of 2008, but after this time, most mortgage lenders were not willing to take the risk of offering a 100% mortgage.

The risk with 100% mortgages is that it is possible to enter negative equity if the house drops in value, leaving the owners with a debt that is higher than the value of their house. If they were to default on their mortgage the bank would then have to accept a loss if the property was in negative equity, hence why it is considered risky by mortgage lenders.

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How Much Deposit Do I Need as a First-Time Buyer?

Most first-time buyers will need to provide at least a 10% deposit. This can be difficult, especially if they are renting a property. There are a few ways that first-time buyers can get help with this, such as the mortgage guarantee scheme, where first-time buyers only have to provide a 5% deposit to get onto the property ladder. This is available at the time of writing although it will come to an end in June 2025.

First-time buyers can also open a savings account called a lifetime ISA, to which the UK Government will add a 25% bonus, up to a maximum amount of £1000 per year. The Lifetime ISA can be withdrawn when you are buying your first home. The Help To Buy ISA is now no longer available, but if you opened a Help To Buy ISA before November 2019, you can still use this for a deposit until 2030 and receive the 25% bonus on your savings.

Different Types of Mortgages

Skipton Building Society launched a 100% mortgage in 2023 called the ‘track record’ mortgage, which was designed to help renters who have a good track record of paying their rent to buy their first house. Buyers can access this mortgage if they have proof they have made their rent payments in full and on time for at least 12 months, and meet the required credit score and other affordability criteria.

One type of mortgage that would allow you to buy a house with zero deposit is a guarantor mortgage. This is where another person, usually a close friend or family member, agrees to take responsibility for the loan if you cannot keep up with the repayments. The guarantor may even have to provide their own property as collateral if they cannot afford to make up the shortfall in payments themselves. This type of mortgage will also come with a higher interest rate than one with a deposit.

A similar 100% mortgage product is known as a family deposit mortgage. This is where your family can use their own property or savings for collateral on your mortgage. They would have to deposit cash into a designated savings account that they cannot withdraw until the end of a predetermined period. After the time has passed and you have kept up with the house repayments, the money in the savings account is returned to your family.

Different types of mortgages such as buy-to-let mortgages or mortgages for a second home will usually require a higher deposit and may have higher interest rates too, which will affect your monthly payments. A specialist mortgage broker who has expertise in these types of mortgages will be able to advise you further.

When you are buying a house, remember other costs besides the mortgage will need to be covered, such as solicitors fees, stamp duty where applicable, mortgage arrangement fees, valuation fees, surveys and more, so make sure you have enough money saved to cover these costs too.

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