The deposit is usually the biggest hurdle for anyone looking to buy a property. It’s also one of the areas where the right advice early on can save you thousands — because how much you put down affects not just whether you can buy, but how much you’ll pay every month.
We help clients across Birmingham, Solihull, and Tamworth navigate this every day, and the answer to “how much do I need?” is rarely as simple as people expect.
The Minimum
Most lenders require a minimum 5% deposit. On a £250,000 property, that’s £12,500. There are some 95% mortgage products available, and a handful of lenders have explored higher loan-to-value options, but 5% remains the practical floor for most buyers.
However, minimum doesn’t mean optimal. A 5% deposit puts you in the highest-risk lending bracket from the lender’s perspective, which means higher interest rates and more limited product choice.
How Deposit Size Affects Your Rate
Mortgage rates are tiered by loan-to-value (LTV) ratio. The more you put down, the lower your LTV, and the better the rates available to you.
The most significant rate improvements typically happen at these thresholds: 90% LTV (10% deposit), 85% LTV (15% deposit), 80% LTV (20% deposit), and 75% LTV (25% deposit).
The difference between a 95% LTV rate and an 80% LTV rate can be substantial — often 1-2% or more. On a £200,000 mortgage, that could mean £150-£300 per month in payment differences. Over a mortgage term, we’re talking tens of thousands of pounds.
This is why we always have a detailed conversation about deposit strategy before recommending products. Sometimes waiting six months to save an extra few thousand can move you into a cheaper LTV bracket that saves far more over the mortgage term.
Building Your Deposit
The obvious answer is save more, spend less. But there are some specific strategies worth considering.
Lifetime ISAs let you save up to £4,000 per year towards your first home, with the government adding a 25% bonus (£1,000 per year). You need to be between 18 and 39 to open one, and the property must be under £450,000.
Family support doesn’t always mean a gift. Some lenders offer family deposit mortgages where parents’ savings are held as security rather than given away. The parents get their money back after a set period, and you get access to better rates.
Shared ownership lets you buy a share of a property (typically 25-75%) with a smaller deposit based on the share you’re purchasing. It’s not for everyone, but it’s worth exploring if full purchase feels out of reach.
We can walk you through all the options based on your specific situation. Get in touch for a no-obligation chat about your deposit options.
What Counts as a Deposit?
Most lenders accept savings, gifts from family, inheritance, and proceeds from selling an existing property. Some lenders accept equity in other properties.
What lenders generally won’t accept: borrowed money (personal loans, credit cards), undisclosed gifts, or funds without a clear provenance. Anti-money laundering regulations mean you’ll need to evidence where your deposit came from — bank statements showing the savings history or a signed gift letter from family.
We help clients prepare their deposit evidence as part of the application process. Getting this right upfront avoids delays and complications later.
