How much deposit do you really need?
Your deposit decides which mortgages you can access and the rate you'll pay. This guide covers how much to aim for, the schemes that can boost it, and the smart way to get there faster.
Deposit, LTV and your rate
Your deposit is the cash you put in; the mortgage covers the rest. The bigger the deposit, the lower your loan-to-value (LTV) and the cheaper your rate. The mainstream minimum is 5% (a 95% mortgage), but rates improve markedly at 10%, 15%, 25% and especially 40%+ deposits. A larger deposit also widens your choice of lenders and improves affordability.
5%, 10%, 15% or 25%?
A 5% deposit gets you on the ladder but at the highest rates and with the most exposure to negative equity if prices dip. 10–15% is the practical sweet spot for most first-time buyers, balancing achievability against rate. 25% (a 75% mortgage) unlocks some of the best deals. Beyond 40% the rate benefit flattens, so it's rarely worth delaying a purchase just to push the deposit higher.
| Deposit | LTV | Typical rate access |
|---|---|---|
| 5% | 95% | Highest rates, fewest lenders |
| 10% | 90% | Good choice, mid rates |
| 15% | 85% | Strong rates |
| 25% | 75% | Among the best deals |
| 40%+ | ≤60% | Cheapest rates available |
LISA, gifted deposits and schemes
A Lifetime ISA adds a 25% government bonus on up to £4,000 a year (£1,000 free annually) toward a first home up to £450,000 — one of the most powerful deposit boosters available. A gifted deposit from family is widely accepted if accompanied by a letter confirming it's a gift, not a loan. Shared ownership and other schemes can lower the cash needed, at the cost of rent on the share you don't own.
Use a LISA early
Where to keep your deposit
While you save, your deposit should work — but safely. Easy-access and fixed-rate savings, cash ISAs and Lifetime ISAs all suit short horizons because the capital is protected. Avoid putting a deposit you'll need within a few years into the stock market, where a downturn could hit just as you're ready to buy. The calculator above lets you see how your interest rate and monthly contribution change the timeline.
Common mistakes
- Saving only for the deposit. Stamp duty, legal fees, survey and moving costs need separate cash — don't arrive at completion short.
- Ignoring the LISA bonus. For eligible first-time buyers, the 25% bonus is effectively a free uplift to your deposit.
- Draining your emergency fund. Keep a cash buffer after completion for moving-in costs and the unexpected.
- Chasing 40% when 25% is enough. Beyond a 75% mortgage the rate gains shrink; buying sooner may beat saving longer.