How much deposit is needed to buy a house?

24/01/2019

The bigger the deposit you can put down on a property, the better the mortgage. Our property experts explain the nuances of deposits and how much is needed for a property.

Saving for a deposit is arguably the most difficult thing about buying a property. It can take some homeowners years to save for the money for a deposit, whilst others prefer to put down a bigger deposit on their property. We asked our property experts for their advice on how much deposit you’ll need to buy a house and what your options are when it comes to purchasing a property.

0% Deposit mortgages

They are a lot rarer than they used to be, but it is possible to buy your property without a deposit at all. These days, 0% deposit mortgages are usually guarantor mortgages, meaning that the homebuyer can use someone else – often parents – to cover the deposit. This can implicate the guarantor themselves though: if the homebuyer can’t pay the mortgage, the guarantor may have to.

The minimum deposit

The deposit amount needed is worked out as a percentage of the value of the property; you then must borrow whatever’s left and pay this as your mortgage. The minimum deposit needed for the house you’re buying is 5%, since the largest mortgage you can take out is 95% of the property's value. The average UK house price in June 2018 was £228,000: therefore, the smallest deposit you can put down for a property of that value is £14,000.

The recommended deposit

Just because the smallest deposit you can put down is 5%, doesn’t mean that you automatically should: mortgages have interest, after all. Mortgages tend to have lower interest rates when you put down a larger deposit. A 20% deposit will give you a much better mortgage: in the case of the aforementioned £228,000 property, this would mean putting down a deposit of £45,600.

A larger deposit

Obviously, the larger your deposit, the less you have to pay on your mortgage. You stand a better chance of being accepted if you put down a mortgage of more than 5%, and all lenders conduct affordability checks to deduce how reliable you are as a borrower. It's best to speak to a mortgage specialist to find out more


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