The three thresholds
| Deposit | On a £250,000 home | What it gets you |
|---|---|---|
| 5% | £12,500 | A mortgage, from a smaller pool of lenders, at the highest rates. Supported by the government mortgage guarantee scheme. Some new-build flats excluded. |
| 10% | £25,000 | Most lenders, noticeably better rates, more flexibility if your situation is unusual. |
| 15% | £37,500 | Better rates again. The difference between 10% and 15% is often bigger than between 15% and 25%. |
| 25% | £62,500 | Close to the best rates on the market. Rare for first-time buyers without family help. |
The percentage is called the loan-to-value the other way round: a 10% deposit is a 90% LTV mortgage. Lenders price in bands of 5%, so getting from 9% to 10% can save you real money every month. Use the payment calculator to see the difference a rate makes.
Where the deposit can come from
- Savings. Ideally in one account, built up over time, so the lender can see the trail.
- Lifetime ISA. Save up to £4,000 a year and the government adds 25%. The single best deal for under-40s. Full guide.
- A gift from family. Very common. Needs a signed letter saying it is a gift, not a loan. Gifted deposit guide.
- Inheritance or a bonus. Fine, with the paperwork.
- Not a loan. Borrowing your deposit (personal loan, credit card, a loan from family that has to be paid back) is a problem for almost all lenders.
Deposit is not the whole cost
Add stamp duty (often zero for first-time buyers under £300,000), solicitor, searches, survey, mortgage fee, removals and a cushion. Call it £3,000 to £5,000 on top. The full list. And on exchange you usually need 10% of the price available even if your mortgage deposit is 5%; your solicitor can often negotiate 5% down, but ask early.
Getting there faster
- Lifetime ISA first, every year, before anything else.
- Automate a transfer on payday. What you do not see, you do not spend.
- Consider a cheaper first home. A 10% deposit on £200,000 is £20,000; on £300,000 it is £30,000, and the monthly payment is a third higher too.
- Look at schemes: shared ownership needs a deposit on your share only; Co-Ownership in Northern Ireland needs none at all. Schemes guide.
A note on the numbers. Thresholds, schemes and typical costs are correct as far as we know at the time of writing and are for England and Northern Ireland unless we say otherwise. Rules change and lenders differ. Check the current position, and get advice from a qualified broker before you commit.
Quick answers
Can I get a mortgage with no deposit?
Almost never in the normal market. A handful of lenders offer 100% deals with a family guarantee or a track record of paying rent, and Co-Ownership in Northern Ireland needs no deposit because you buy a share. For most people, 5% is the floor.
Is a bigger deposit always better?
Up to a point. Getting from 5% to 10% to 15% makes a real difference to the rate. Beyond 25% the gains are small, and it may be better to keep some cash for the costs and for emergencies.
Does the deposit have to be in my account for a long time?
Lenders want to see where it came from, not how long it has sat there. Three to six months of statements showing it building up, or a clear gift letter and the giver's statement, is what they need.
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