How much deposit do I need to buy a house?

Saving for your first home is one of life’s greatest challenges, especially with the current increase in the cost of living. It’s possible to get on the property ladder with a minimum 5% deposit, however we recommend saving as much as you can to have access to a wider range of lenders.

It’s important to factor in other costs into your savings such as stamp duty, moving costs and legal fees. The good news is, if you’re a first-time buyer and your home is under £300,00 then there will be no stamp duty to be paid, if it’s over this threshold, it will only be 5% of the property value.

The secret to saving is to save as much as you can as soon as you can. We aren’t saying you need to save a large sum of money, but each penny will add up and help towards your goal.

Reasons to save a larger deposit:

Cheaper monthly repayments

The smaller your loan is, the cheaper your monthly repayments will be.

Access to more mortgage deals

Having a larger deposit will allow you to access more mortgage deals from many lenders. They’re more likely to offer lower interest rates due to the larger deposit.

Improved chance of being accepted by your lender

When applying for your mortgage all lenders will carry out affordability checks, based on your current income and outgoings. This means if you are putting down a smaller deposit you’re more likely to fail the check as you will need to spend more on your mortgage.

Bigger Budget

Unfortunately, if you have a smaller salary and can’t borrow as much as you like you may need a larger deposit to make up the value of the property you are wishing to buy.

Lower risk

If you own more of your home, you are less likely to fall into negative equity, this is where you owe more than the property is worth.

Mortgage deposit calculator:

Our mortgage borrowing calculator can help you discover how much money you could borrow so that you can own your own home. By entering a few key details to get an estimate of how much you could borrow and help get you ready to buy your first home.

Struggling to save?

Help to buy equity loan

This involves putting in a 5% deposit and the government will then lend 20% on top of this (40% if you are in London). However, the deadline for this scheme is 31st October 2022, so if this is something you were considering our mortgage advisers can help advise if this is right for you.

Shared ownership

This is more commonly known as ‘part buy, part rent’. It is a scheme that allows you to buy part of the property and pay rent on the rest, you will still typically need a 5% deposit. This current scheme is available from 2021-2023 and you can read more here.

Buy a house with your friends

Although this might not be for everyone and can come with some risks, it is a good option to get yourself onto the property ladder.

Gifted deposit

A common way to get onto the property ladder is through a gifted deposit from your friends or family. They don’t necessarily need to give you a cash deposit they can use their own property as collateral, again our mortgage advisers can help advise on this.

Lifetime ISA

If you’re between 18 and 40 a lifetime ISA is a great opportunity to help get you towards your saving goal. The government offers a 25% bonus on your current savings and the account needs to be open for at least a year to access the bonus.

A mortgage adviser will look at your current income and outgoings and help work out how much you can afford to borrow. If you have any questions, please feel free to contact us today. We’re here to support you throughout your home buying journey.