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What deposit is needed for a mortgage

Everything you need to know about mortgage deposits, the minimum lenders will accept and recognised deposit sources

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 10th September 2019 *

With the average property price currently in excess of £250,000, you may be wondering how much deposit you'll need to get a mortgage of that size at a great rate.

Knowing what mortgage you could get based on your deposit amount is a priority for many potential borrowers, though if you've already been declined a mortgage or you're worried about the type of loan you'd get due to certain factors (such as self-employed or having bad credit), then this article is for you. 

Below you will find everything you need to know about mortgage deposit requirements, the deposit sources UK lenders accept and more, including:

If you'd like to find out how much you could get with your deposit size, call us on 0808 189 2301 or make an enquiry

The expert brokers we work with can find lenders who accept a variety of deposit amounts (or even if you have no deposit) thanks to their whole-of-market access, which allows them to find deals that often aren't available to the public. 

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What are the minimum mortgage deposit requirements in the UK? 

The lowest deposit requirement you’re likely to find is 5%, although some mortgage lenders will request at least twice that amount.

There will be a wider choice of borrowers on offer if you have 10% at your disposal, and the rates will obviously be more attractive if you have 20% or more, which is why it may be in your interest to put down the maximum amount you’re able to stump up.

There are a minority of mortgage providers who may still offer 100% mortgages, under specific circumstances, such as when parents or family members provide cash or equity as a guarantee, or when a 95% mortgage is supplemented by a 5% unsecured loan.

Fortunately, the advisors we work with are ‘whole-of-market’, meaning they have a working relationship with all mortgage lenders, not just a select few, so they know which lenders have the best deals to suit your circumstances.

How much deposit do I need for a £100k mortgage?

Mortgage lending is based how much you need to borrow offset against the value of the property and lenders refer to this as the loan-to-value (LTV) ratio.

The maximum loan-to-value you will find for a residential property in the UK is 95%, so you will need a deposit of at least £5,000 (5%) to get a mortgage for £100k house. If you were to increase your deposit to £10,000, you would own 10% of the property outright.

Some lenders may prefer you to put down more than that to lessen any risk involved in the deal, and many might insist upon it if you have bad credit or the property you’re buying is classed as a ‘non-standard’ construction.

How much deposit do I need for a mortgage in the UK?

As mentioned, the loan-to-value can be a deciding factor. If you have a good credit rating, then there are lenders who will accept as little as 5% deposit. A poor credit rating could see lenders asking for a larger deposit.

However, if you can afford more, then this could save you a considerable amount over the life of the loan.

Below are a few examples of how much deposit you’d need to raise for properties valued between £100,000 and £350,000 and based on the percentage of deposit required.

Deposit 5% 10% 15% 20% 25%
£100,000 £5,000 £10,000 £15,000 £20,000 £25,000
£150,000 £7,500 £15,000 £22,500 £30,000 £37,500
£200,000 £10,000 £20,000 £30,000 £40,000 £50,000
£250,000 £12,500 £25,000 £37,500 £50,000 £62,500
£300,000 £15,000 £30,000 £45,000 £60,000 £75,000
£350,000 £17,500 £35,000 £52,500 £70,000 £87,500

The above is for indicative purposes only and we recommend you contact an expert broker for the most up-to-date information.

Does having bad credit affect how much deposit I need for a mortgage?

This will depend on a number of factors, including the lender’s appetite for risk.

Some lenders will expect you to put down more than the minimum deposit amount if you have adverse credit, but exactly how much more might depend on the severity of the credit problem, how long it has been on your file and how closely you meet their other eligibility requirements.

Does income affect how much deposit I’ll need?

Not necessarily, but it does have an affect on how much you can borrow. Lenders use multiples of income to decide how much they will allow you to borrow.

Most lenders will lend 4–4.5x income or 5x, and a few will go as high as 6x your income.

Below is an example of how different income multiples can affect how much you can borrow.

Income 4x 5x 6x
£25,000 £100,000 £125,000 £150,000
£30,000 £120,000 £150,000 £180,000
£35,000 £140,000 £175,000 £210,000
£40,000 £160,000 £200,000 £240,000
£45,000 £180,000 £225,000 £270,000
£50,000 £200,000 £250,000 £300,000

For the right advice based on your income and how much deposit you’ll need, talk to one of the advisors we work with.

Are there mortgage options for low deposit customers?

Yes, there are. So, great news: there is more than one way to get a mortgage and they don’t all require big deposits.

We’re going to banish the myths that all too often dissuade people from applying for a mortgage because most people are completely unaware that there are alternative options.

With the rate of mortgage applications decreasing, high street lenders and banks are now offering alternative options for homeowners to help them onto the property ladder or buy their next property.

Additionally, government schemes such as Help to Buy have been introduced to help first-time buyers save while the government boosts those savings, and can even lend up to 20% of an average mortgage deposit.

Read on to find out more about these schemes, or make an enquiry and the experts we work with will talk you through all of the available options and suggest the best course of action.

What is a guarantor mortgage?

One way that parents can help their children get on the property ladder is to allow them to ‘charge’ against their property. This is often referred to as a guarantor mortgage.

If you are fortunate enough to have a family member (such as a parent) with a property that has enough equity available, this could be an option for you, as it could mean that you pay just a 5% deposit or no deposit at all.

How does it work?

This type of mortgage allows a buyer to use any equity they hold in another property, in most cases their parent’s home, as security for their loan.

Typically these lenders won’t go over 90% LTV for the charge on the other property.

For example, if your parents have a property valued at £200k and a mortgage of £100k, they could potentially take a charge for your deposit of up to £50k.

However, lenders often adapt these policies, so to stay up-to-date, speak with a mortgage advisor. Their whole-of-market access means that they can find tailored deals based on your circumstances. 

Can equity release be used to raise the deposit for a mortgage?

Another way that parents are helping their children on the property ladder is through equity release.

Equity release refers to a range of products that allow homeowners over the age of 55 to access the money tied up in their home. They can then release this equity in order to contribute towards a deposit.

But what if my parents aren’t in a position to gift me a deposit?

Asking a parent to take out an equity release loan so they can give away a large deposit isn’t an option for everybody and can often mean that parents have to reduce their own retirement fund. This can be a daunting thought and isn’t something many people would want to ask their family to do for them.

A good alternative is a springboard mortgage. This makes buying a property possible for parents who cannot afford to give away a lump sum deposit.

What is a springboard mortgage?

A springboard mortgage is similar to charging on a family member’s property. The big difference is that instead of using equity as security for the mortgage, a parent or loved one can deposit part of their savings into a secure account, and these funds can cover all or part of your mortgage deposit, if the mortgage provider is willing to lend under these circumstances.

As long as the mortgage is repaid on time, they will have the money returned, with interest, in three years’ time.

This option can appeal to both parents and first-time buyers as it provides the peace of mind of knowing that the money borrowed will be returned.

How much deposit do you need for a springboard mortgage?

Most springboard mortgage lenders require a 5% deposit, as long as the buyer’s parents or other relative(s) can provide 10% of the property's price.

However, there are a handful of specialists offering a 0% deposit, for the first time since the credit crunch.

This is great news for those without deposits but fortunate enough to have a parent or loved one in a position to lend money as security against the loan.

(Deposit amount based on lenders required deposit percentage and a 10% security deposit provided by parents)

Property Price 10% Security Deposit Deposit percentage Deposit amount (GBP)
£100,000 £10,000 0% £0
£100,000 £10,000 5% £5,000

Can someone give me a deposit as a gift?

Yes. You may also be unaware that some lenders will allow gifted deposits from family, friends and even an employer. Bear in mind that there are more lenders available for those with their own savings than for those who have been gifted a lump sum by family.

However, just because it is deemed as less favourable by lenders, it isn’t impossible for friends or family to gift money to enable you to buy a property. If a person is gifting you some money, they will need to complete a gifted deposit letter, although sometimes lenders have their own forms to complete.

This is just to confirm that they have no interest in the property and will not be making arrangements for or demanding the money to be repaid in the future.

Some lenders will allow you to use gifted funds to cover 100% of the deposit, and gifted deposits can also be used in conjunction with the borrower’s own savings or a scheme like Help to Buy.

What are government equity loans?

This scheme involves an equity loan and it can be an option for someone who needs a deposit for a mortgage but is happy to borrow it on an interest free basis.

It requires the buyer to raise 5% of the property value as a deposit and then the government will provide up to a further 20% as a loan.

The buyer would then have access to more attractive mortgage rates from lenders who participate in the scheme as it gives banks and building societies the peace of mind to lend larger mortgages due to the buyer’s combined deposit of up to 25%.

Bear in mind that the equity loan is interest free for the first five years, before interest kicks in at 1.7% p.a. – also, because it's an equity loan, the government will get a share if the property is sold.

The best thing to do is to speak with an advisor. They’re experts when it comes to equity loans and can give you the right advice when in comes to the advantages and disadvantages of the scheme.

How does a Help to Buy: ISA work?

Another way in which the government helps first-time buyers is through Help to Buy: ISAs. However, as of 30 November 2019, the scheme is closing to new customers. You will still be able to pay into the scheme until 2029, and you must claim your bonus by 2030. 

This type of ISA rewards the saver as for every £200 they save into their account, the government will provide a bonus of £50.

This would mean that if a £3,000 deposit was saved, an additional £750 would be provided as a booster by the government.

To qualify for a Help to Buy: ISA, you must:

  • Be aged 16 years or over
  • Be a UK resident
  • Be a first time buyer
  • Not have another active cash ISA in the same tax year

But remember: the minimum government bonus is £400, so you need to have saved at least £1,600 into your Help to Buy ISA before you can claim your bonus.

The maximum government bonus you can receive is £3,000. To receive that, you need to have saved £12,000.

Can I use a Help to Buy: ISA on a joint mortgage?

Yes. One of the great benefits of a Help to Buy: ISA is that an account is available to each first-time buyer, not each household.

This means that if you and your partner are both saving deposits to get a mortgage as first time buyers, you could each have a Help to Buy: ISA, and receive a government bonus of up to £6,000 towards your first home.

To qualify for the government bonus, the property you are buying must:

  • Live in the UK
  • Have a purchase price of up to £250,000 (or up to £450,000 in London)
  • Be the only home you will own
  • Be where you intend on living
  • Be purchased with a mortgage

For more information about these government schemes get in touch and the advisors we work with will help you decide whether one of them is your best bet to fulfil your property ambitions.

Should I get advice before applying?

Yes! We always recommend gaining advice from a mortgage advisor before applying so you can understand the deposit required for the mortgage best suited to you.

Bespoke and helpful advice can really put your mind at ease, especially at a time that could feel stressful and daunting.

It can also save you a lot of time as a mortgage advisor can dedicate their time to research the best lenders based on your circumstances and can assist you through the process of applying for a mortgage.

The advisors we work with are experts and can find out what deposit you’ll need for a mortgage.

Speak to an expert about your mortgage deposit 

If you have questions and want to speak to an expert for the right advice, call us on 0808 189 2301 or make an enquiry.

Updated: 10th September 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.

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Mortgages and Deposits