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How much deposit do you need for a mortgage?

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Mortgages can be a confusing topic especially as you move closer to finding your next home. Deposits are no exception to the rule. Our handy guide will walk you through how much deposit you need for a mortgage and provide tips, tricks and access to our calculator to help you along the way.

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How much deposit do you need for a mortgage?

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. However, the bigger the deposit you can save, the better. According to research from Halifax, the average deposit put down by those buying their first home in the first half of 2018 was 16%.

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Related Links: Online Tools – Find me a mortgage

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Is it better to save a bigger mortgage?

It’s generally better to save a bigger deposit. This has a number of great benefits including:

1. Cheaper Mortgage Repayments – The more of the property you own the smaller the loan will be, and the smaller the repayments will be.
2. Reduce the Risk – With potential market instability owning more of your home makes it less likely you’ll fall victim to ‘negative equity‘ where you owe more on your mortgage than your property is worth.
3. Access to better deals and rates – The more you save the better the rates you’ll be offered by lenders. This could save anywhere between £100 – 200 extra per month in repayments.
4. Increase your chances of getting a mortgage – There are many things that influence whether or not you’ll be accepted for a mortgage. One of these is the size of your deposit. By increasing your deposit you also increase the chances that a lender will accept your application once you finally submit it.

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How to better save for your deposit?

Saving for your mortgage is notoriously difficult. Below are some simple tips and tricks for putting yourself in the best possible position to save for your deposit.

1. The Share Ownership Scheme -Shared ownership schemes are a cross between buying and renting; aimed mainly at first-time buyers. You own a share and then rent the part you don’t own at a reduced rate. Keep an eye out for properties that benefit from this.
2. The Help to buy scheme – a savings account offering a 25% bonus from the government when you buy your first home
3. Get a helping hand for the bank of Mum & Dad – This could be either borrowing money for a deposit or getting a joint mortgage. This will either boost your deposit or allow you to borrow more.
4. Take advantage of the Help to buy equity loan – Another great government scheme. You put in a deposit of 5%, the government lends you 20% (40% in London), and you get a mortgage to cover the rest

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Related Link: Borrowing, Repayments & Expenditure – Use our simple financial calculators to work it all out

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Deposit sizes by location. How much would you typically need in your area?

Take a look around this interactive map, find your area and see the average deposit size needed for a property in that area.

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Our Mortgage Deposit FAQ

How do you calculate how much I could borrow?

Remember this is only an estimate and only considers your income in how much you could potentially borrow. Banks and building societies take into account a number of different factors when calculating how much they will lend to you including monthly outgoings and other debts so the actual amount you can borrow may vary considerably. If you receive an annual bonus this may increase the amount you can borrow.

What factors affect how much I could borrow?

Mortgage lenders really want to know if you can offer the repayments on your home. Because of this how much you can borrow will be based on a variety of things including your salary (how much you earn), along with your credit score (your financial history).

Can I book a mortgage appointment? 

We always advise speaking to an expert advisor as they can help understand your individual wants and needs and point you in the right direction. Did you know it’s free to book a mortgage appointment? Get in touch with us today.

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Related Links

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Looking to buy your first property? Here are 8 top tips to help you save for a deposit

Help To Buy scheme: Everything You Need To Know

Use our Financial Calculator to See How Much You Could Borrow