woman holding toy house

How much deposit do I need to buy a house?

Buying a house is a complicated thing. Whether you’re a first-time buyer or a veteran property purchaser, one question that seems to be evergreen is; “How much deposit do I need to buy a house?”

In this blog we’ll aim to answer the most frequently asked questions surrounding deposits for houses, such as how much deposit do I need?, how should I save for a house deposit?, and can I get a mortgage with no deposit?  

First Time Buyers

What is a mortgage deposit?

A mortgage deposit is a lump sum of money that you have to pay towards the cost of your home that has to be paid upfront. The amount of money that you need for a house deposit can vary wildly, depending on the current state of the housing market, the health of your credit score, and the amount that lenders are willing to offer you as a mortgage loan.

So, let’s address the elephant in the room; how much deposit will you have to pay upfront?

happy couple smiling

How much house deposit do I have to pay?

This isn’t a simple thing to answer because there isn’t one definitive figure. Usually, mortgage lenders will want you to contribute at least 5% of the property value as a deposit. To put that into some kind of context, if the house that you’re looking to buy is worth £250,000, 5% of that is £12,500, so you’ll need to find at least this amount of money before the bank or building society will give you the rest of the money.

But that’s just one example. There are 100% mortgages that require no deposit at all, but they are rare to come by and the interest rates tend to be much higher. The bigger the house deposit that you can put down, you’ll improve your chances of being accepted for a mortgage and become eligible for more mortgage packages with favourable terms and lower interest rates. The moral of the story? Start saving asap!

Is a 10% deposit enough for a house?

Even as recently as 25 years ago, a 10% house deposit would have been seen as a fairly substantial deposit, but nowadays it is often seen as the bare minimum that you should stump up. You will find that even if you can scrape together enough to equal a 15% deposit for a home then the number of mortgage options that become available to you will increase dramatically.  

So, yes, a 10% deposit is enough to secure a mortgage, but if you can dig deep and find a little bit more then it will pay huge dividends for you in the future in terms of lower interest rates. For every 5% extra deposit that you can save, the more deals you’ll get access to, and once you get to 20% they start to become really attractive. Remember; when it comes to house deposits, bigger is better.

key in door

How much deposit do I need to buy a house as a first-time buyer?

If you’re new to getting on the property ladder then you might be asking yourself, ‘How much deposit do I need as a UK first-time buyer?’. If you’ve read up to here then I bet you can guess the answer by now!

Whether you’re a first-time buyer or not, the bigger the deposit that you can find, the less the bank or building society has to lend you, which makes you a more attractive lending prospect to them. This means you’ll benefit from lower interest rates and more lenders offering their products to you. 

It’s the same principle as applying for a credit card but on a much bigger scale. The better your credit score is, the more companies you get offering you their credit card products and the APR is much lower compared to if you had a lower credit score.

However, as a first-time buyer, you are eligible for some products that others aren’t…

woman holding keys

What is the average deposit for a house for a UK first-time buyer?

If you decide to use the Government’s Help to Buy scheme to get your first mortgage then you’ll only need a 5% deposit. There are, of course, caveats to this. 

  • You must be over 18,
  • You are not eligible if you have ever owned a property in the past,
  • The Help to Buy scheme is only available on new build houses,
  • Your house must be under the maximum property purchase price for your geographical location,
  • You must be able to afford the fees and interest payments.

Ah yes, the fees and interest payments. Once you’ve found the 5% deposit and arranged a repayment mortgage of at least 25% of the purchase price of the property, the Government will then loan you up to 20% to use as the deposit. But did you notice the magic word there? 

Loan. The Government want you to pay it back. You won’t pay interest on it for the first five years but then the loan starts to accrue interest in line with the Consumer Price Index, so when you’re factoring in your monthly mortgage repayments remember that you’ll also have to pay for this loan too. 

You can, of course, apply for other types of mortgages if you don’t meet the above criteria, but expect to have to put down a larger house deposit than 5%.


What is the fastest way to save for a house deposit?

When you’re deciding how much deposit for a mortgage you’re going to put down every penny counts. The faster you save and the more you save, the quicker you’ll be collecting your keys after getting a great mortgage deal. But, what are the best ways of saving for your deposit?

Cut back and downsize:

Look into what you can cut back on and do it. Switch utility providers, reduce your mobile phone bill, make your own lunches instead of buying them every day, swerve the coffee shops, sell your car and buy a more economic one or use public transport – you could even cancel your TV and music subscriptions.

Have a realistic figure in mind:

Remember – the bigger the deposit, the better the mortgage deal. Imagine you have two properties in mind: one is £300,000, the other is £200,000, and you want to save enough for a 20% deposit. On the £300,000 house, a 20% deposit would be £60,000, whereas the 20% deposit on the £200,000 home would be £40,000. 

That’s a big difference. Remember, you’ll still have to pay stamp duty (unless you’re a first-time buyer), solicitors fees, and search fees on top of your deposit, so be realistic with how much deposit you can afford to save – especially if you’re purchasing the property on your own.

Decide how to save:

Rather than just putting ten-pound notes under your mattress or stashing them in a biscuit tin in a cupboard, invest your deposit money into a scheme that will make you money, such as an ISA or interest-paying savings account.

Ask us about house deposits!

Need more advice about deposits for a home? Have you saved up enough money to purchase a property and are ready to take the next step? Do you need help working out how much house deposit you need before you can apply for a mortgage? 

If the answer to any of these questions is yes, then let us help. We have years of experience navigating the ever-choppier waters of raising house deposits and changing mortgage packages, so get in touch for a free consultation.

Get the best mortgage broker advice from PBS Mortgages

Here at PBS Mortgages, we pride ourselves on taking our mortgage customers under our wing and making sure that they fully understand the process. Whether it’s advice on what you can reasonably afford that you need, or you’d like our mortgage brokers to take you through the application process, we’re only too happy to help.

Get in touch today and let us do the heavy work when it comes to hunting down the perfect mortgage for you.