Mortgage deposits explained

Who is this page for?

If you are a first time buyer or looking to invest in a Buy to Let property, this page provides information on mortgage deposits. 

What is a mortgage deposit?

A mortgage deposit is the cash deposit that you pay upfront when buying a house. If you’ve got your eye on a house, you’ll need a deposit to buy it.

You’ll likely need to pay at least 5% of a property’s total value when you buy a house – can you also pay more which may mean your LTV ratio and monthly payments may be lower.

The larger a deposit you put down, the more of your property you’ll own and smaller mortgage you’ll need to get to pay the rest of the house’s value. 

How much will you need for a mortgage deposit?

The size of your mortgage deposit will depend on the value of the home you want to buy. For those buying a property to live in, it's usually at least 5% or 10% of the overall property value.

For example, on a property valued at £200,000, a lender may ask for a 10% deposit – which is £20,000.

Find out more about saving for a deposit

How much can you borrow using your mortgage deposit?

How much you can borrow from the lender will depend on the size of your deposit. Most lenders ask for at least 5% of the total property price, though it helps to pay more upfront as your monthly payments will generally be less.

The amount you can borrow is also dependent on other factors, including:

  • The amount you earn per year
  • Your credit rating
  • Any financial commitments

You can work out how much you can borrow beforehand, factoring in your monthly incomings and outgoings. Use our mortgage calculator to give you a better idea of what you can afford.

Lenders will typically have a maximum amount they can offer you, so factor this in when looking at house prices and deciding what you can afford

What’s an average first time buyer deposit?

The national UK average deposit for first time buyers is around 20%. Deposits vary across the country and national averages can change.

In the South, especially around London, house prices tend to be more expensive so you might need more money for your deposit.

It helps to put down as much as you can comfortably afford as part of your deposit. This way, your monthly mortgage payments will be less and you’ll have a bigger share of equity in your home.

Buy to Let and Shared Ownership Deposit

You’ll require a different kind of deposit if you’re keen on purchasing a home to rent out or as part of a shared ownership agreement.

Buy to Let mortgage deposit

With Buy to Let mortgages, the required deposit is usually 25% of the property value. The value of the deposit you put down depends on the value of the property and how much you can afford as a lump sum.

For example, on a Buy to Let property valued at £200,000, a lender may ask for a 25% deposit – which is £50,000.

Shared ownership deposit

In a shared ownership mortgage, you can buy between 25% and 75% of a property and pay rent on the remainder. You only take out a mortgage for the part of the property you own, so the deposit could be smaller.

The content on this page is for reference and does not constitute finance advice.

For impartial financial advice, we recommend government bodies like the MoneyHelper.

Calculators & tools

We have a range of mortgage calculators to help you:

  • Find out how much you could borrow from Lloyds Bank
  • See how much you could save if you make overpayments on your mortgage
  • Get an idea how a change to the Bank of England Base Rate could effect your monthly payments

Use our mortgage calculator and tools >

Need to speak with someone?

You can talk to us over the phone or use our mortgage video service from the comfort of your own home.

Contact us