A mortgage deposit is the upfront cash payment you make when buying a property. In the UK, the minimum deposit is 5% of the property price, but larger deposits (10–40%) unlock significantly better interest rates and more lender options.
Minimum Deposit Requirements
In the UK, the minimum mortgage deposit is 5% of the property value. This means for a £250,000 property, you'd need at least £12,500. However, the amount you put down significantly affects the interest rates available to you.
If you're a first-time buyer, schemes like shared ownership can reduce the deposit you need even further.
How Deposit Size Affects Your Rate
Lenders price mortgages in Loan-to-Value (LTV) bands. The more you put down, the lower your rate:
| Deposit | LTV | Typical Rate Impact |
|---|---|---|
| 5% | 95% | Highest rates; fewest lenders |
| 10% | 90% | Much better choice; rates drop ~0.3-0.5% |
| 15% | 85% | Good range of lenders and rates |
| 25% | 75% | Excellent rates; most options available |
| 40%+ | 60% | Best rates available in the market |
The biggest rate improvement typically happens between 90% and 85% LTV, and again between 80% and 75% LTV. See our affordability guide for how this impacts your borrowing power.
Strategies to Save Your Deposit Faster
- Lifetime ISA: Save up to £4,000/year and get a 25% government bonus (£1,000/year). Must be used for your first home (under £450,000)
- Regular savings accounts: Higher interest rates for consistent monthly deposits
- Gifted deposits: Family members can gift deposit money (lenders require a signed declaration)
- Shared ownership: Only need a 5% deposit on your share (e.g., 5% of 25% = 1.25% of full property value)
- Bank of Mum and Dad: Parents can act as guarantors or offer their property as additional security — see our joint mortgages guide for JBSP options
Acceptable Deposit Sources
Lenders need to verify where your deposit comes from (anti-money-laundering rules). Accepted sources include:
- Personal savings (bank statements showing accumulation)
- Gifted from immediate family (with a signed gift letter)
- Sale of another property
- Inheritance (with supporting documentation)
- Bonus or share scheme payouts
Lenders will not accept unsecured loans (credit cards, personal loans) as a deposit source. For the full list of costs to budget for, see our fees guide.
Frequently Asked Questions
- What is the minimum deposit for a UK mortgage?
- The minimum is 5% of the property value. On a £250,000 home, that's £12,500. However, a larger deposit unlocks better rates and more lender options.
- Can I use a gifted deposit?
- Yes. Most lenders accept gifted deposits from immediate family members. The person gifting must sign a declaration confirming it's a gift, not a loan.
- Does my deposit size affect my interest rate?
- Yes, significantly. Lenders price mortgages in LTV bands. Moving from 95% to 90% LTV can reduce your rate by 0.3-0.5%, and the best rates are at 60% LTV or below.
- Can I use a personal loan as a deposit?
- No. Lenders will not accept unsecured borrowing (credit cards, personal loans) as a mortgage deposit source. The deposit must come from savings, gifts, inheritance, or property sale proceeds.
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