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What is a mortgage deposit?
If you’re thinking about getting on the property ladder, the first thing you’ll usually need to consider is your mortgage deposit.
A mortgage deposit is the money you pay upfront when buying a home. Your mortgage covers the rest. For example, if a home costs £250,000 and you’ve saved £25,000, you’d borrow the remaining £225,000.
Your deposit also determines your loan-to-value ratio (LTV). This is how much you borrow, expressed as a percentage of your property value. In our example above, you'd have a 90% LTV. Understanding this matters because it affects the mortgage deals available to you.
If you’re new to Mortgages, see our guide to mortgage deposits for more detail.
How much is a mortgage deposit?
Most lenders will want you to put down at least 5% of the property price. On a £250,000 home, that’s £12,500.
Here’s a quick guide to how deposit sizes usually affect your mortgage:
| Deposit | LTV | What it means for your mortgage |
|---|---|---|
| 5% | 95% | Gets you on the property ladder sooner, but interest rates are usually higher. |
| 10% - 40% | 90% - 60% | Opens up more competitive rates. |
| 40%+ | 60% or lower | Can give you access to the best mortgage deals. |
Smaller deposits can be a way to buy sooner, but higher LTVs could mean higher interest rates. The exact deposit you'll need depends on your circumstances, the property, and your lender.
Try our Mortgage Calculators to see what could work for you.
Why is a mortgage deposit important?
A bigger deposit can unlock better interest rates, and even a small change in your loan-to-value ratio (LTV) — for example, moving from 95% to 90% LTV — can make a noticeable difference. LTV is the percentage of the property's value you borrow compared to its total price. Borrowing less (by increasing your deposit) typically leads to smaller monthly payments over the life of your mortgage.
There's also protection against negative equity. If house prices dip, a larger deposit gives you more of a buffer. Negative equity occurs when the amount you owe on a property is higher than its current market value, leaving you with a potential financial shortfall if you need to sell. Check out our Mortgage Guides for more tips.
How to save for a mortgage deposit
Saving takes time, but a clear plan helps.
- Set a realistic target: Base it on the type of property you want.
- Keep it separate: Put your deposit fund somewhere you can track it, away from everyday spending.
- Take a closer look at where your money goes. Small changes, like cancelling unused subscriptions, eating out less, or switching providers, can add up over time. If you're looking for more tips, we also have other articles on budgeting and managing your finances that you might find helpful.
- Consider a Lifetime ISA: If you’re a first-time buyer aged 18-39, you can save up to £4,000 a year and get a 25% government bonus. That’s up to £1,000 extra each year for your deposit.
For more ideas, see our guide on how to save as a first-time buyer.
Mortgage deposit and credit scores
Your credit score affects the mortgage deals you can access. Lenders use it to see how reliable you are as a borrower. A higher score can make getting a mortgage easier, while a lower score might mean you need a bigger deposit or face higher interest rates.
You can improve your score by:
- Paying bills on time
- Staying within credit limits
- Being on the electoral register
- Avoid applying for multiple credit cards or loans within a short period of time.
Some lenders specialise in working with borrowers who have less-than-perfect credit. Learn more about what affects your credit score and ways to improve it.
Frequently asked questions
You can get a Mortgage in Principle online with most lenders. This tells you how much you can borrow in principle. With some lenders, you can even complete your full application online.
Don't just focus on the headline rate. Take a close look at product or arrangement fees, choose between fixed or variable rates, and consider any early repayment charges. Think about how long you plan to have the mortgage, as this can impact whether early repayment charges apply. Use our Mortgage Calculators to see how these factors affect your monthly payments.
You’ll usually need proof of identity, address, and income. Find out more in our First Time Buyer’s Guide.
Yes, but you might need a larger deposit or pay higher rates. Speaking to a mortgage adviser helps you understand what's available.
If you're struggling to find a mortgage deal that suits your situation, consider speaking to specialist lenders. They may be able to offer tailored products that fit your unique needs, especially if you have a non-standard financial situation or a lower deposit.
Yes. You'll usually need at least two years of accounts or tax returns. Some lenders are more flexible than others.
Lenders typically offer 4–4.5 times your annual income. They’ll also consider your outgoings and existing commitments.
Tracker mortgages move with the base rate, meaning your interest rate rises or falls in line with changes to the base rate. Fixed rates stay the same during your fixed period.
Read our guide on how much does it cost to move home? for more information.
Start saving today
Are you a First-Time Buyer looking to get on the ladder? A well-planned deposit can open the door to your first home. Start saving, stay on track, and make it happen.
Find and apply for a mortgage that’s right for you. From buying your first home to moving to your forever home, TSB is here to help.
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