How Much Deposit Do I Need?

Buying a home is exciting, but one of the first questions most people ask is, “How much deposit do I need?” If you’re looking for mortgage advice in, Preston, Southport, Lancashire or beyond this guide will break it down in simple terms so you know what to expect.

What Is a Mortgage Deposit?

Your deposit is the amount of money you put towards the property upfront. The rest is covered by your mortgage. Lenders usually express this as a percentage of the property price. For example, if you buy a home for £200,000 and put down £20,000, that’s a 10% deposit.

Minimum Deposit for First-Time Buyers

If you’re a first-time buyer, the good news is you can get on the property ladder with as little as 5% deposit. That means if you find a home for £150,000, you’d need £7,500. These are often called 95% mortgages because the lender covers 95% of the property value.

However, the smaller the deposit, the fewer mortgage deals you’ll have access to. A bigger deposit usually means better rates and lower monthly payments.

Can I Buy With a £5k Deposit?

A common question we hear as mortgage advisers in Lancashire is whether £5,000 is enough. It depends on the property price, but there’s good news. Some lenders now offer mortgages that accept a fixed £5k deposit rather than a percentage, which can make things easier for buyers with limited savings.

Just remember, you’ll also need to budget for fees like solicitors and surveys.

Why Does Deposit Size Matter?

Your deposit affects your loan-to-value ratio (LTV), which is the percentage of the property price you’re borrowing. The lower your LTV, the less risk for the lender, and the better your interest rate. For example:

• 95% LTV (5% deposit) – fewer deals, higher rates
• 90% LTV (10% deposit) – more choice, better rates
• 75% LTV (25% deposit) – some of the better rates available

Saving for a Deposit in Lancashire

If you’re buying in Preston or Southport, property prices vary. In some areas, you might find homes under £120,000, which means a 5% deposit could be around £6,000. In other areas, prices are higher, so planning ahead is key. Setting up a dedicated savings account and checking if you qualify for schemes like Lifetime ISA can help.

Help for First-Time Buyers

Government schemes like Help to Buy and Shared Ownership can make it easier to get started. These options often require smaller deposits and can be a great way to buy your first home in Lancashire.

How Much Should You Aim For?

While 5% is the minimum, aiming for 10% or more is ideal if you can. It gives you access to better mortgage deals and lower monthly payments. If you’re unsure what’s realistic for your situation, speaking to one of our mortgage brokers based between Preston and Southport can help you plan.

Summary

So, how much deposit do you need? At least 5% for most lenders, but more is always better. Whether you’re a first-time buyer or home mover with a £5k deposit or looking for the best rates in Lancashire, planning ahead makes all the difference.

Ready to Get Started?

If you’re thinking about buying in Preston, Southport or anywhere in or outside of Lancashire, we’d love to help. Get in touch with Mortgage Advice Hut today for friendly, expert guidance tailored to your needs.

 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT