How Much Deposit Does a First-Time Buyer Need for a Mortgage in the UK?
Most first-time buyers will need a deposit of at least 5% of the property’s value, although the amount you need will depend on the mortgage lender, the property and your individual circumstances. A larger deposit can give you access to a wider choice of mortgage deals and potentially lower interest rates.
For example, a 5% deposit on a £200,000 property would be £10,000, while a 10% deposit would be £20,000.
Can a first-time buyer get a mortgage with a 5% deposit?
Yes, 95% loan-to-value mortgages are available, which means you provide a 5% deposit and borrow the remaining 95% of the property’s value. You’ll still need to meet the mortgage lender’s affordability and eligibility requirements.
The number of deals available and the interest rates offered can also differ from those available with a larger deposit.
Is a 10% deposit better than a 5% deposit?
A 10% deposit can give you access to a wider range of mortgage products because you’re borrowing a smaller proportion of the property’s value. It may also help you obtain a more competitive interest rate.
However, that doesn’t necessarily mean you should delay buying simply to reach a 10% deposit. Whether that’s worthwhile will depend on your circumstances, the property market and the mortgage options available to you.
How much deposit would I need for a £250,000 house?
With a £250,000 purchase price:
- A 5% deposit would be £12,500
- A 10% deposit would be £25,000
- A 15% deposit would be £37,500
- A 20% deposit would be £50,000
Your deposit is only one part of buying your first home, so it’s important to budget for other potential costs associated with the purchase as well.
Can I get a first-time buyer mortgage with no deposit?
There are some mortgage products that may allow eligible buyers to purchase a property without providing a traditional cash deposit.
These mortgages usually have specific eligibility requirements and aren’t suitable or available to everyone.
There are also mortgages where family members can help a first-time buyer, for example by providing financial support or using savings or property as additional security.
How much can I borrow as a first-time buyer?
The amount you can borrow isn’t determined by your deposit alone.
Mortgage lenders will assess your income, regular financial commitments, credit history and other circumstances when calculating affordability.
Different lenders use different affordability calculations, so the maximum mortgage available can vary between lenders even when they’re assessing the same applicant.
Should I speak to a mortgage adviser before saving a bigger deposit?
It can be worth speaking to a mortgage adviser before assuming you need to save thousands of pounds more. You may already have enough deposit for a mortgage based on your circumstances.
A mortgage adviser can look at your income, deposit and likely borrowing requirement and compare the mortgage options available from different lenders.
At GHL Direct, we compare thousands of mortgage deals from more than 50 UK lenders and help first-time buyers understand their options from their initial enquiry through to completion.
Buying your first home? Speak to a mortgage adviser and find out how much you could potentially borrow and what deposit you may need.
YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
