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Most people will need a deposit of at least 5% of the property’s value to get a mortgage.
This is the minimum most lenders accept, though putting down more can give you access to better rates and increase your chances of approval.
If you’re buying a £200,000 home, a 5% deposit would mean saving £10,000. For many first time buyers, this is the starting point.
Mortgage Deposits
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Why Does Deposit Size Matter?
Your deposit affects how much you need to borrow, which impacts both your monthly repayments and the deals available to you.
Lenders tend to group mortgage products in 5% bands. These bands are based on how much of the property value you’re borrowing, known as loan-to-value (LTV).
So, you’ll typically see mortgage deals at 95%, 90%, 85% and so on. The lower your LTV, the more competitive your options are likely to be.
A larger deposit:
- Reduces your monthly repayments
- Increases your choice of mortgage products
- Makes your application look lower-risk to a lender
While 5% may be enough to get started, putting down 10% or more can open up stronger mortgage deals and offer more stability.
Where Can My Deposit Come From?
Personal Savings
Saving gradually is the most common route, especially for a first time buyer mortgage. Lenders like to see a steady savings habit, which can help show that you’re financially prepared for homeownership.
Gifted Deposits
Many buyers get help from family, often referred to as the “bank of mum and dad.” Most lenders accept gifted deposits, as long as the money is a genuine gift and not a loan.
The person giving the money will usually need to sign a declaration and provide ID and bank statements. Some lenders may also accept gifts from friends, though this is less common.
Discounted Purchases
If you’re buying from a family member or as a sitting tenant, the lender may treat the discount as your deposit.
This means you might not need to provide a separate cash amount. This is also common with a right-to-buy mortgage, where local authority tenants are offered a discount as part of the scheme.
Do I Need a Deposit for a Remortgage?
If you’re remortgaging and not borrowing any extra, you usually won’t need to put down a new deposit. The lender is simply replacing your current mortgage balance.
If you are raising additional funds, such as for home improvements, the lender will assess affordability, but a cash deposit isn’t typically required.
Can I Borrow My Deposit?
While some lenders may allow you to borrow your deposit using a personal loan, this is rare and usually only considered in specific cases.
If you go down this route, the repayments on that borrowing will be factored into your affordability checks. In most cases, lenders prefer your deposit to come from savings or a gift.
Borrowing the full amount is riskier and can reduce the amount you’re able to borrow overall.
How Do I Prove Where My Deposit Came From?
Lenders will want to see where your deposit has come from. This is part of their checks under anti-money laundering regulations.
You’ll usually need to provide:
- Recent bank statements showing your deposit amount
- Supporting documents for large payments, such as a receipt for a car sale
- A memorandum of sale if the deposit is coming from the sale of another property
- A signed declaration if your deposit is a gift, along with documents from the person gifting the funds
Large cash deposits can be difficult to evidence, so the longer the money has been in your account, the easier it tends to be to satisfy the lender’s requirements.
