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Getting a Mortgage with a Small Deposit

What is the lowest deposit you can have for a mortgage? Find out here

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By Pete Mugleston   Mortgage Advisor

Last updated: 1st May 2019 *

How much is the minimum deposit for a mortgage?

For some, saving up a deposit is the biggest obstacle blocking their path to the property ladder, so it comes as no surprise that the most common question we’re asked is “what is the minimum deposit for a mortgage in the UK?”

The good news is that the expert advisors we work with know everything you need to know about low deposit mortgages, 100% mortgages, and how to go about getting them.

The following topics are covered below…

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The bigger the deposit, the better the deal

To put it simply, the larger the deposit you put down for a mortgage, the better the rates you’re likely to receive. Lenders tend to view customers with larger deposits as lower risk, so it’s usually a good idea to put down as much as you can afford.

For some borrowers, this will obviously be a lower sum than others, which is no doubt why so many customers as us “how much is the minimum deposit for a mortgage in the UK?”

The answer is that it can differ from one lender to another and may also depend on the type of mortgage product you’re after.

For instance, minimum deposits for buy to let mortgages are often higher than for standard residential home loans, often coming in at 25%.

Residential mortgages come with a minimum deposit requirement of 10% at some lenders, although there are a number of providers who will accept 5%, and a small minority still offer zero deposit mortgages for borrowers with no lump sum to put down, under exceptional circumstances, such as when a family member is acting as a guarantor.

5% Deposit mortgages

Lenders typically reserve their best rates for borrowers with larger deposits - between 30-40% of the property’s value will get you a table-topping deal in most cases.

That said, there are low deposit mortgages on offer in the UK for borrowers with a 5% to put down. Some lenders will offer 95% mortgages outright if you pass their affordability checks, and the government’s Help to Buy scheme has made these deals easier to come by.

Minimum deposit mortgages on Help to Buy

Help to Buy was exclusive to new build houses at launch, but has since been expanded to other property types. To qualify, buyers need at least a 5% deposit and the property they’re purchasing cannot be worth more than £600,000.

The government will supplement your deposit with an equity loan of up to 20% of the property’s value (40% in London), so you will only need to take out a 75% mortgage with the lender. Borrowers will not be charged any loan repayment fees for the first five years.

The obvious benefit of Help to Buy is that you can take out a smaller mortgage, but it’s important to remember that it is possible to find 95% mortgage deals that do not involve Help to Buy, and one of these could come with more competitive rates.

If you’re shopping around for mortgages with low deposits and are unsure whether to use Help to Buy, get in touch and the expert advisors we work with will help you find the lenders offering the most favourable deals for customers with a 5% deposit.

How much can a borrow on a 5% deposit mortgage?

Lenders used to calculate how much you can borrow by multiplying your annual salary by four or five, but these days, they’re more concerned about affordability, and that comes down to more than just the number on your wage slip.

When determining how much they’re willing to lend you for a 5% deposit mortgage, the lender will take the following factors into account:

  • Credit score:
    The cleaner, the better, but some lenders will consider borrowers with adverse credit on their files (fortunately, the advisors we work with are experts when it comes to helping people with bad credit find a mortgage).
  • Other outgoings:
    You will be seen as lower risk if you have no other significant debts against your name at the time of the mortgage application.
  • The property type:
    A standard house or flat made from bricks and mortar is generally more straightforward to secure a mortgage for than a non-standard property, such as a listed building or one with a thatched roof.
  • Your age:
    Some lenders impose a minimum and maximum age cap. They won’t cater for customers under 21 or over 75, for example, but some providers will consider going higher or lower, under the right circumstances.

Low deposit mortgages and interest rates

Those who put down the minimum deposit required for a mortgage do so at the risk of unfavourable rates and extra fees, as higher loan to value (LTV) mortgages usually come with higher interest rates and charges due to the extra risk the lender is taking on.

With this in mind, some lenders might ask borrowers with minimal deposits to commit to a mortgage indemnity guarantee (MIG), a security policy that protects them against loss if you default. This will usually be incorporated into the interest and fees.

Can I get a low deposit mortgage if I’m a first-time buyer?

Yes! In fact, you’re more likely to be offered one of the lowest deposit mortgage products discussed above as a first-time buyer, since many of them are aimed at this demographic.

The aim of government’s Help to Buy scheme is to help more people get a foot on the property ladder by making mortgages more affordable to first-time buyers, and many of the 95% mortgages lenders have introduced are aimed at first-timers.

If you’re looking for the best low deposit mortgages for first-time buyers, make an enquiry and the advisors we work with will search the entire market for the best deals.

Getting a residential mortgage with a low deposit

Getting a residential mortgage with a low deposit is often more straightforward than a buy to let or commercial mortgage, as a smaller deposit is typically required.

As we’ve already discussed, the minimum deposit you’ll need for a mortgage in the UK is 5% (unless you’re planning to pursue a zero deposit mortgage) and the lenders which offer these cater for residential buyers, as does the Help to Buy scheme.

The important thing to remember if you’re seeking a residential mortgage with a low deposit is that having access to the entire market is vital.

Many lenders will offer you unfavourable rates if you approach them with a 5% deposit, but the advisors we work with can help you find the providers who offer the best deals to customers in this situation.

Can I get a buy to let mortgage with a low deposit?

That depends on your definition of a low deposit, as buy to let mortgages in general often require a higher deposit than residential.

Certain UK lenders will turn you away unless your deposit amounts to 25% of the property’s value, but some  will deal with customers with 20%, and a few  10% or under, providing you pass the affordability checks.

If your deposit is at the lower end of this scale and you’re seeking a buy to let mortgage, your chances of getting one on competitive rates will depend on other factors such as the viability of the investment (i.e. whether the forecast rental income will cover the mortgage payments), your credit rating and how experienced you are as a landlord.

As most buy to let mortgages are interest only, it may also help if you have a recognised repayment vehicle in place to fall back on when it comes to repaying the loan itself. The table below with give you an idea of which repayment vehicles lenders prefer.

Repayment Vehicle Accepted by.. Notes
Existing Endowment Policy Most lenders Usually go on middle projected figure
Stocks/Shares ISA Most lenders Usually take 100% of balance
Savings in the bank Few lenders % of balance may be limited
Other investment bond Most lenders Usually take 100% of balance
Sale of this property Few lenders Usually required to have equity over 150k
Sale of another property Most lenders Usually ok, often limited to 75% LTV
Pension lump sum Few lenders Usually required to have a large lump sum

Can I get a low deposit mortgage while on benefits?

In theory, it’s possible to obtain a low deposit mortgage while on benefits but your chances of securing competitive rates will drop.

This is because the number of lenders you can turn to will be restricted if you fall into two niche categories (on benefits and low deposit).

Fortunately, there are specialist lenders out there who have no problem dealing with customers who claim the following:

  • Child tax credit
  • Working tax credit
  • Child benefit
  • Disability Living Allowance (DLA)
  • Industrial Injuries Benefit (IIB)
  • Incapacity benefit (IB)
  • Attendance Allowance
  • Pension Credit
  • Maternity Allowance
  • Severe Disablement Allowance
  • Widow's Pension
  • Carer's Allowance

In some cases, the lender will only grant borrowers in receipt of benefits a loan if they’re  also in full-time employment or retired, but if you have a clean credit rating and your other debts are minimal, it may be possible to find a specialist provider who deals with both niches.

Access to the whole of the market is essential to find favourable deals for borrowers in circumstances as specific as this, so make an enquiry and the advisors we work with will help you find the lenders who may be able to offer you the right advice .

Can I get a right to buy mortgage with a low deposit?

The Right to Buy dates back to the days of Margaret Thatcher’s government, which allowed council house residents to buy their home  at a heavily discounted price in the 1980s.

The scheme is alive and well today and it’s possible to take advantage of it with a minimal deposit. In fact, it may be possible to buy your council house with no deposit at all, as in some cases, the Right to Buy discount can be used instead of a mortgage deposit.

Can I get a low deposit mortgage if my family is helping me out?

Yes, as some lenders are willing to accept gifted deposits for mortgage applications.

Most UK providers are happy with gifted deposits from family members, although this my affect the rates your offered, but only a minority are okay with third-party gifts, i.e. a gifted deposit from one or more of your friends.

There are a number of points you need to consider if all or part of your deposit has been gifted to you.

  • The person gifting the money must understand that they will have no interest in the property and no right to get their money back.
  • It’s possible to loan money to a family member, rather than gift it, and have it repaid upon the sale of the property. Independent legal advice may be necessary here.
  • The person gifting the money may have to complete a gifted deposit letter or the lender’s own documentation for this deposit type.
  • Many lenders will ask to see a bank statement as proof of where the deposit is coming from.
  • Gifted deposits can supplement a low deposit you have saved yourself and also be used in conjunction with Help to Buy.

If you’re hoping to take out a mortgage using a deposit that is made up either partially or entirely of gifted money, get in touch and the whole of market advisors we work with will help you find a lender who specialises in these applications.

Can I get a mortgage with no deposit?

At many lenders the answer will be a straight-up no, but no deposit mortgages do exist and there are schemes out there than may improve your chances of getting one.

Springboard Mortgages

One of these is the ‘springboard mortgage’. Instead of paying a deposit, this is where your parents, or other close family member, deposit money into an account with the lender. After three years, and provided the mortgage repayments have been kept up, they get their money back with interest.

Guarantor and family mortgages

If you’re lucky enough to have a family member who’s willing to help you get onto the property ladder, a guarantor mortgage may be an option, and there are lenders out there who offer these at 100% LTV, under the right circumstances.

Instead of laying down a deposit, the relative who is helping you out will be asked to do one of the following…

  • Use their home as security:
    The lender may ask to secure the loan against your guarantor’s property, meaning they could reclaim money from it, or even repossess it altogether if you fail to keep up with your payments.
  • Secure the loan against savings:
    Instead of a deposit, your guarantor may be asked to place a lump sum in a savings account held by the lender. They will not be able to withdraw from this pot until a certain percentage of the mortgage has been repaid.

Are there other ways raise a deposit?

Yes. There are a number of ways to raise a deposit apart from the traditional way of simply saving a deposit.

These include:

  • Equity release from an existing property (you can read more on this in the next section)
  • Parents could remortgage their home
  • Directors loans
  • Personal (unsecured) loans
  • Credit card (not recommended)

Raising capital on other property

If you are buying with little or no deposit and already own property, it may be possible to withdraw some of the equity by either remortgaging or taking a second charge secured loan for the amount of deposit you require. Usually if the equity is there, a remortgage works out cheapest, but it’s not always the best option. For help on this read our article secured loans Vs remortgages.

Concessionary purchases

A concessionary purchase is when someone buys a property at a discount from the true market value. Many lenders will base the value on the actual purchase price you have agreed, and then you’ll need to put in your deposit based on that (so 120k property discounted to 100k, customer putting in a minimum of 10% = 10k deposit required). On the flip side, some lenders accept the discount as a form of deposit and use the true market value at 120k (so with 20k discount and a minimum deposit of 12k required, it may even be possible to buy with no contribution for deposit from yourself). There’s different types of concessionary purchase; Landlord gift; developer gift; vendor gift; and family gift.


Landlord gifted deposit/discount
This is where a tenant buys from their landlord at a discounted purchase price. Say for instance the house is valued at £200k, but for a quick sale the landlord offers it to his tenants for £180k, knocking 10% off the value, this 10% can be used by the borrower towards their deposit.
Currently, there are relatively few Landlord discount mortgage lenders now, but there are still some out there who consider these applications. Often there’s limits imposed on the amount of discount acceptable, and cannot be below a certain percentage (any discount under 5-10% will not count toward deposit). Some lenders may also stipulate that the borrower puts in at least 5% of their own cash – usually because this then indicated a certain level of commitment by the borrower who is then statistically more likely to maintain repayments.


Developer gifted deposit /discount
In a similar fashion to the landlord gifted deposit, a housing developer can sell a new property at a discounted price and the lender take this into account towards the borrower's deposit. Again most lenders will stipulate that the borrower put in some of their own cash as well, which is often more because new build properties can be seen as higher risk and many lenders require a 15-20% deposit regardless.


Vendor gifted deposit /discount
Again, similar to a developer or landlord discount, just a normal purchase on the open market but at a discounted value, usually to ensure a quicker sale. These are less common and less frequently accepted by lenders as the risk is higher, with them establishing the properties true value and the reasons why the vendor would want to sell at a cheaper price.


Family discount
This is the same as a vendor gifted deposit, but as a discount purchase from a family member. These are more common arrangements and often come with much larger discounts from the true value of the property. As a result more lenders are accepting of these arrangements as the risk is deemed lower and the reason behind the discount more palatable, and some lenders don’t require the borrower to input any of their own cash, using the whole discount as their deposit.

For many people, the above options just aren't possible - whether that's down to not having a wealthy family member willing to help out, credit score, or maybe an affordability issue. If you've been declined or are unsure about it's still a good idea to seek advice on things as the specialists we work with can point you in the right direction for what you need to do next.


Alternatives to a 100% mortgage

If saving up is the biggest obstacle blocking your path to the property ladder, a 100% mortgage may not be the only available option. Alternatives include…

  • Unsecured borrowing:
    This means loans and credit cards. Most lenders will not allow you to uses these sources for a deposit, but a few are happy with it.
  • Bridging finance:
    Bridging finance is a short-term loan aimed at borrowers who need capital immediately and know that they will have the means to pay it back in the future. It is typically offered with higher interest rates than mortgages.
  • Gifted deposit mortgages:
    Some lenders are okay with borrowers using a deposit that was gifted from a friend or family member. See the section above for further information.

To find out whether a 100% mortgage is a viable option for you and discuss all of the possible alternatives, get in touch and the advisors we work with will assess your case.

Talk to a low deposit mortgage expert today

All the brokers we work with have passed a 12 module training course and With OMA, you get a 5-star service, and access to leading equity release brokers who:

  • Are bona-fide experts - and are OMA and LIBF Accredited
  • Cover the entire mortgage market
  • Have relationships with all of the leading providers

So it’s no wonder that we’re consistently rated 5 stars by our customers on Feefo.

If you have questions and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0800 304 7880 or make an enquiry here.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances.  – We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

Updated: 1st May 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

Find out more about the deposit you need for different mortgages

Mortgages and Deposits