How Much You Need for a House Deposit (2024 Figures)
- Minimum Deposit Requirement: A deposit of at least 5% of the property's price is generally needed to secure a mortgage
- Advantages of Larger Deposits: Larger deposits secure better mortgage deals and lower monthly payments.
- Government Assistance: Schemes like the Mortgage Guarantee Scheme allow buyers to enter the market with just 5% deposits.
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- How Much Deposit You Need?
- What is a Mortgage Deposit?
- Average House Deposit in the UK
- Key Factors That Affect How Much Deposit You Need
- Calculating Deposit for Specific House Values
- Benefits of a Large House Deposit
- Getting a 100% Mortgage: Is It Possible?
- Saving for Your House Deposit
- Final Thoughts
- Frequently Asked Questions
How Much Deposit You Need?
In the UK, the deposit required for buying a house typically depends on the property price and your mortgage type. Here’s a detailed breakdown with 2024 figures:
- Minimum Deposit: You generally need at least 5% of the property price for a standard mortgage. For example, a £200,000 property would require a deposit of £10,000.
- Higher Deposits for Better Deals: If you can save 15-30% or more, you’re likely to access better mortgage deals with lower interest rates.
"Saving for a deposit? Every penny counts!"
What is a Mortgage Deposit?
A mortgage deposit is the initial sum you pay upfront when purchasing a property. It's a portion of the property's total cost, and the remainder is covered by your mortgage.
So, when should you pay the deposit?
You need to pay the deposit on the exchange day or when contracts are finally swapped between the buyer and the solicitor of the seller. This process make the sale legally binding since all both parties already agreed to the terms.
Related: UK Conveyancing Process for Buyers Explained: No Stress Success
Average House Deposit in the UK
According to Halifax, the average house deposit for a first-time house buyer is £53,414 and the average deposit size is 19%. However, this may still vary across the UK.
Most banks require only atleast 10% of the price of the house.
Now, you might be wondering: "Is it possible to buy a house with a 5% deposit"?
The good news is under the Mortgage Guarantee Scheme, which will run until June 2025, you may get a mortgage with only 5% deposit for the home you want to purchase. This scheme helps those who wanted to be home owners enter the property ladder without feeling too overwhelmed.
Examine the table below to get an idea on the average first-time house buyer deposit, house price, and purchase across different regions in the UK. These values will help you decide if you are ready to commit in purchasing a new home.
Source: Which.co.uk
Key Factors That Affect How Much Deposit You Need
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Property Price
- The deposit is a percentage of the home's purchase price. Generally, in the UK, you might aim for at least 5-20% of the property's value.
- Higher-priced properties will naturally require a larger absolute sum as a deposit.
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Financial Circumstances
- Your income, debts, and financial commitments play a significant role. Lenders assess your ability to save for and sustain mortgage payments.
- A stable income and lower debt levels can potentially allow you to save a larger deposit more quickly.
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Mortgage Lender Requirements
- Different lenders have varying deposit requirements. 'How much deposit do I need for a house UK' can vary significantly from one lender to another.
- Shopping around for mortgages can give you a sense of the minimum deposit requirements in the current market.
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Market Conditions
- Economic factors, interest rates, and the housing market's health influence deposit sizes.
- In a more cautious market, lenders might require higher deposits to mitigate risk.
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Future Financial Goals
- Consider how your deposit fits into your broader financial planning. It's crucial to balance saving for a deposit with other financial goals and emergency funds.
Calculating Deposit for Specific House Values
The amount of deposit you need to prepare depends on the property value.
Let's imagine a character named Emma Wright, who is planning to buy her first home. The property she's eyeing is listed at £350,000, and she’s considering putting down a 10% deposit.
The Calculation for Emma's 10% Deposit
To calculate her deposit, Emma would use the formula:
Deposit= Total Property Value × Deposit Percentage
So, for a 10% deposit on £350,000:
Deposit = 350,000 × 0.10 = £35,000
Outcome:
Emma would need £35,000 for a 10% deposit on her new home priced at £350,000.
Take a look at the table below to compare deposit amounts at different percentages for various property values.
| Property Value (£) | 5% Deposit (£) | 10% Deposit (£) | 15% Deposit (£) |
|---|---|---|---|
| 250,000 | 12,500 | 25,000 | 37,500 |
| 275,000 | 13,750 | 27,500 | 41,250 |
| 300,000 | 15,000 | 30,000 | 45,000 |
| 325,000 | 16,250 | 32,500 | 48,750 |
| 350,000 | 17,500 | 35,000 | 52,500 |
| 375,000 | 18,750 | 37,500 | 56,250 |
Benefits of a Large House Deposit
Preparing a high deposit comes with several advantages:
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Better mortgage deals: Higher deposits typically translate into better mortgage terms and interest rates. According to Which.co, 90% mortgages were generally around 0.3 to 0.4% cheaper than 95% deals.
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Lower monthly mortgage repayments: The bigger your deposit, the cheaper your loan will be.
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Higher chance of being accepted: You’ll likely pass your lender’s affordability checks because it proves your financial capability.
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Lesser risk: The more deposit you make, the smaller the risk the bank takes by lending to you. They might even reward you with a better deal on the loan.
Considerations Before Making a Large House Deposit
Assess several factors such as your income, debt level, and financial commitments before deciding how much deposit you can make.
Economic factors, interest rates, and the housing market's health can also influence your deposit size.
Advice from our property expert Paul:
In my experience, having a stable income and managing debt effectively allows you to save for a larger deposit more quickly. Personally, I always advise balancing your deposit-saving efforts with your broader financial goals. It’s important to plan for the future while ensuring you keep an emergency fund for unexpected expenses.
In my opinion, saving for a deposit is about finding that balance between achieving homeownership and maintaining financial stability.
Below is an example of how increasing your deposit can unlock significant savings and better mortgage options.
One of our recent clients requested some information about deposits after selling a home to us.
With the information and article we provided them, they managed to secure a better mortgage deal by increasing their deposit from 5% to 15%. Not only did this reduce their monthly payments significantly, but it also saved them thousands in interest over the mortgage term.
Learn more about how we’ve helped homeowners across the UK save time and money on their property journey on our About Us page.
Getting a 100% Mortgage: Is It Possible?
A 100% mortgage allows you to loan the full value of your home with no cash deposit. However, very few lenders offer this deal.
Skipton Building Society introduced a 100% no-deposit mortgage last May 2023. It lets renters purchase their first home without a deposit.
100% mortgages are usually available only through guarantor mortgages. A guarantor is responsible for paying the mortgage if you can no longer pay it.
Remember: This type of mortgage comes with a higher risk if property values decrease. You might end up in negative equity, where your home’s value falls below the remaining amount on your mortgage.
Saving for Your House Deposit
Let's face it, it's not easy to save for a house deposit. But, it's not impossible. With the right and effective strategies, getting your first home can be within reach sooner than you might think.
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Set a clear saving goal: Start by determining the amount you need for your deposit. Use online calculators to estimate your target based on various property values.
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Create a budget and track spending: Identify areas where you can cut back to increase your savings.
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Prioritise high-interest debts: Pay off high-interest debts first, such as credit card balances to reduce your monthly outgoings.
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Automate your savings: This ensures you regularly save a portion of your income. We’ve seen that automating savings has a huge impact—our internal data shows clients who automate at least £200 a month reach their deposit target up to 12 months faster than manual savers.
5. Look for ways to boost income: Explore additional income sources, such as part-time work, freelancing, or selling items you no longer need.
Final Thoughts
Saving for a house deposit is a key milestone toward homeownership. Whether you’re targeting the minimum 5% or aiming for a larger deposit for better mortgage terms, consistent saving and smart planning are essential.
Focus on balancing regular savings with reducing debts and exploring support options like the Mortgage Guarantee Scheme. Small, consistent steps can make the process manageable and achievable.
At Housebuyers4u, we understand the challenges of saving for a deposit, especially in today’s market. If you’re exploring ways to step onto the property ladder or need a fast, reliable sale to save up for a larger deposit in a bigger house, our Sell House Fast service offers tailored solutions to help you take the next step.
