Mortgage deposit explained How much deposit do I need for a mortgage?

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The size of your mortgage deposit will dictate the kind of mortgage deal you can have

The size of your mortgage deposit will make a real difference to the best mortgage deal you can find, and even whether you can get a mortgage at all. We explain how much you need to save, and how to get the best mortgage for you.

Minimum mortgage deposit

In the current mortgage market you’ll need a deposit of at least 5% of a property’s value to get a mortgage. A lender would then lend you 95% of the property’s value.

So, if you wanted to buy a £150,000 property you would need to save up at least £7,500 and borrow £142,500.

But 5% is just the minimum; there are a few different reasons why you would be better off with a bigger mortgage deposit.

Reasons to save a bigger mortgage deposit

1. Cheaper mortgage repayments – it might sound obvious, but the bigger your mortgage deposit, the smaller your loan will be. And the smaller your loan is, the cheaper your monthly repayments are.

2. Less risky – if you own more of your home outright you are less likely to fall into ‘negative equity’, where you owe more on your mortgage than your property is worth. Being in negative equity can make moving house or switching mortgage very difficult.

3. Better mortgage deals – a larger deposit will make you less risky for mortgage lenders. As a result, they can offer you more competitive mortgage deals with lower interest rates.

4. Better mortgage chances – all lenders conduct affordability checks to work out whether you can afford mortgage repayments based on your income and your outgoings. If you only put down a small deposit it’s more likely you will fail these checks because you'll need to spend more on your mortgage each month.

Go further: compare mortgages with Which? Money Compare

Mortgage deposits for the best mortgage deals

The cheapest mortgage deals on the market will typically require you to have a 40% deposit or more, so on a £150,000 property this would mean a deposit of £60,000. 

However, saving up a 40% deposit is unrealistic for many people. The average mortgage deposit for first-time buyers is 20%, and that in itself is too difficult for some. 

The bigger your deposit, the better the mortgage deal you're likely to be offered, so just focus on saving as much as you can based on your personal circumstances.

Our step-by-step guide to buying property highlights everything you need to do to secure the home of your dreams, from saving for a deposit to collecting the keys. 

How much deposit do I need? 

To calculate how much you’ll need to save for your mortgage deposit, there are two things you should consider:

  • Typical property prices in your area – you can get a rough idea of this from websites such as Rightmove or Zoopla, but speak to local estate agents to get the most accurate information. 

Start by assuming you would borrow 95% of the property's value. If you can't afford the repayments for a loan of that size, you will need to save a bigger deposit. 

Buying a house: extra costs

Although the mortgage deposit is the biggest part of the overall costs that you’ll need to pay to buy a home, there are other things you will need to budget for as well when saving up, including:

  • Stamp duty – this can range from 1% to 15%, depending on the value of the property
  • Mortgage arrangement fees – while these are sometimes waived to entice you in, lenders will often charge anything up to £2,000 to arrange your mortgage
  • Legal fees – you'll need to appoint a solicitor to arrange the purchase of your property. Costs vary between firms, and can range from a few hundred pounds to more than £1,000
  • Property survey - these can range from £100 to more than £1,000
  • Land registry fees - these can range from £50 to £920, depending on the value of the property

Go further: The cost of buying a house - a more detailed look at what you'll need to budget for

Video: what is a mortgage?

Once you've saved up enough money for a mortgage deposit, you'll need to choose the best mortgage for you. Understand repayment vs interest-only mortgages and whether to choose a variable or fixed rate in our two-minute video.


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Video transcript

Unless you have a stack of cash sitting around, getting a mortgage is the essential part of buying a home. But how is a mortgage different from a loan and what type should you get? Unlike a normal loan, a mortgage is specifically tied to the house you're buying. You usually borrow a percentage of the value of that property repaying the amount you've borrowed plus interest charged by the mortgage lender.

If you fail to repay your mortgage, your house could be taken away and sold to cover the loan you've taken out. When you are buying a house, for yourself, there are two main types, of mortgage to chose from. With a repayment mortgage, you gradually repay the amount he borrowed, this is known as the capital.

Each month, some of what you pay goes towards paying off the capital, while the rest covers the interest. By the end of the mortgage, usually in 25 years, you would have repaid everything you've borrowed. An interest only mortgage usually has lower monthly payments because you're not paying off the actual money you borrowed, just the interest.

It's up to you to pay off the capital at the end of the term. By paying a separate amount in to an investment for example. New mortgages usually charge you a lower rate of interest in the first few years to entice you in. This can be fixed or variable. A fixed rate is usually slightly higher, but gives you the security of a regular payment each month.

On a variable rate mortgage, the monthly repayment can change. If the interest rate goes down, you could pay less, but there's a chance it can go up, leaving you to pay more each month. Whatever type you decide you can use the which mortgage comparison tables to search through hundreds of deals from different providers to choose the best deal for you.

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