Let’s talk money. Specifically, the number that keeps first-time buyers up at night.
The deposit.
You’ve seen the ads. “Buy with just 5% deposit!” Sounds great. But is that actually the right
move for you?
Let’s figure it out together.
What even is a deposit?
Simple. It’s the chunk of the house price you’re paying yourself, not borrowing.
Buying a £200,000 place?
Here’s how it breaks down:
5% deposit = £10,000 you pay, £190,000 you borrow
10% deposit = £20,000 you pay, £180,000 you borrow
15% deposit = £30,000 you pay, £170,000 you borrow
Bigger deposit, smaller mortgage. That’s the whole game.
What’s this “LTV” thing?
Loan-to-Value. Sounds fancy. It’s not.
It’s just your mortgage as a percentage of the house price.
For a £200,000 house:
Deposit Mortgage LTV
£10,000 (5%) £190,000 95%
£20,000 (10%) £180,000 90%
£30,000 (15%) £170,000 85%
£40,000 (20%) £160,000 80%
£50,000 (25%) £150,000 75%
Why care? Because mortgage deals are usually grouped by LTV band.
Lower LTV, generally more options with lower interest rates.
For more detailed information, please check out the guide below:
What Is Loan-to-Value (LTV)? A Simple Guide for First-Time Buyers
Can I really buy with just 5% deposit?
Sometimes, yes. There are products out there for it.
5% deposit means you’re at roughly 95% LTV. Here’s what that looks like in real numbers:
£150,000 house → £7,500 deposit
£200,000 house → £10,000 deposit
£250,000 house → £12,500 deposit
£300,000 house → £15,000 deposit
But just because you CAN buy with 5% doesn’t mean it’s automatically your best option.
Is 10% better than 5%?
Often, yeah.
Going from 5% to 10% moves you from roughly 95% LTV down to 90% LTV.
That can unlock more mortgage products. Generally better rates too.
You’re also just borrowing less overall. Simple maths, good outcome.
But don’t drain your entire savings account just to hit that 10% mark. Look at your whole
picture first.
Should I aim even higher? 15%? 20%?
If you can comfortably get there, sure, lower LTV bands can open up more doors.
But here’s the trap: you could spend years chasing an ever-bigger deposit while house
prices move and your life plans change.
The real question isn’t:
“What’s the biggest deposit I can possibly scrape together?”
It’s:
“What deposit gets me a solid mortgage AND leaves me enough cash for everything else?”
Don’t forget: buying a home costs money beyond the deposit
Pay attention here.
Got £20,000 saved? Don’t use all of it towards your deposit.
You’ll likely also need cash for:
Conveyancing (Solicitor) fees
Survey costs
Mortgage fees
Stamp Duty, where it applies
Moving costs
Quick repairs when you move in
Furniture and appliances
Insurance
An emergency cushion
These add up fast. Budget for the whole move, not just the deposit.
Can my parents just give me the deposit?
Yes, this happens a lot. It’s called a gifted deposit.
But lenders want to know where that money came from. The person gifting it usually has to
confirm:
It’s genuinely a gift, not a secret loan
They’re not getting a stake in your house because of it.
Your solicitor will also want proof of where the money’s from. So don’t shuffle money around
randomly — keep a clean paper trail.
What about borrowing my deposit instead?
Different story entirely. A borrowed deposit isn’t the same as a gifted one.
Most lenders won’t accept it at all. Others have specific rules.
If your deposit isn’t 100% your own savings, sort this out early. Don’t leave it as a surprise
mid-application.
Can I use my Lifetime ISA?
Potentially, yes, if you’re eligible and buying an eligible first home.
But the rules change, and there are limits — property price caps, withdrawal conditions,
timing rules.
Check the current government rules before you count on it. https://www.gov.uk/lifetime-isa
Where does the money physically need to be?
You’ll need to prove where your deposit came from. Bank statements, paperwork, the works.
So keep your deposit savings tidy and traceable. Future-you will thank present-you.
What if house prices move while I’m saving?
Annoying reality: they will.
If the type of property you want gets more expensive, the deposit needed for your target
percentage goes up too.
So instead of a fixed number like “I need £20,000,” think in terms of:
Target house price + deposit percentage + buying costs + emergency cushion
That’s a moving, realistic target. Not a random number stuck in your head.
So… how much should I actually save?
No single magic number. Here’s the process instead:
1. Estimate roughly what house you’re aiming for
2. Work out what 5%, 10% and 15% look like in cash
3. See what mortgage options exist at each level
4. Add up your buying costs
5. Decide how much cash you want left over after moving in
Do that, and you’ve got a real target. Not a guess.
Quick-fire FAQs
What’s 5% of £250,000? £12,500.
What’s 10% of £250,000? £25,000.
Is 10% a good target for a first-time buyer? Often, yes. 90% LTV is a solid
middle ground for a lot of buyers. It gives access to a wider range of mortgage products which may reduce the interest rate or overall cost of borrowing. But it depends on you.
The real takeaway
Don’t just chase the smallest possible deposit.
Think about all four pieces together:
Deposit + what you can afford + buying costs + emergency savings.
Nail all four, and you’ll walk into this way more prepared than most first-time buyers.
CERTIFIED QUALIFICATIONS, DISCLAIMER & REGULATORY RISK WARNINGS
Mortgages & Secured Loans: Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Insurance Products: Terms, conditions, and eligibility criteria apply to all protective insurance policies. Premium rates depend entirely on individual circumstances.
Professional Background & No-Advice Boundary
The author of this blog holds professional qualifications as both a UK Mortgage Advisor (CeMAP) and Financial Advisor (DipPFS). However, this blog operates strictly as an independent platform for educational and informational purposes. It is not a trading or operating vehicle for an FCA-authorised financial services firm.All content published on this website is for general informational, educational, and market commentary purposes only. It does not constitute personal financial advice, mortgage advice, credit broking, or a formal product recommendation. Reading this content or interacting with this website does not establish a regulated client-adviser relationship.Information Accuracy & Market Variations
Financial criteria, mortgage interest rates, tax laws, and lender guidelines change frequently. While we aim for accuracy, this content should not be relied upon to make financial choices. A full, regulated individual assessment is necessary before any financial product can be safely recommended. If you require formal, regulated advice, you must contact an active FCA-Authorised Professional