Deposits - what you need to know

Why do I need a deposit?

Following the credit crunch in 2007, mortgage providers are more cautious about agreeing to loans. Having a healthy deposit is one sign, alongside a good credit history, that you’re serious about buying your first home. 

Can I get a mortgage without a deposit?

It’s unusual to be able to get a mortgage without a deposit in the current market.

How much of a deposit do I need?

That depends on your budget and how much your new house is going to cost to buy. In the current mortgage market, it’s estimated that you’ll need a minimum deposit of 5% of the property’s value to be offered a mortgage.

The general rule is that the bigger your deposit is, the better your mortgage rates are likely to be, and the lower your monthly mortgage repayments will be.

There are plenty of free online tools that can help you figure out how much you’ll need to put aside each month, like Money Saving Expert's deposit calculator.

You can also explore government schemes too, such as the Help to Buy initiative, which supports first-time buyers who have a mortgage deposit of at least 5% when buying a home. For more information, take a look at our guide on the different schemes available to first-time buyers.

Don’t forget to save for additional costs

Your deposit isn’t the only thing you need to save for to secure a mortgage, - you’ll also need to account for the cost of stamp duty, solicitor’s fees and surveys. Read our guide to costs you may not anticipate to plan ahead.

When do I pay my deposit?

It’s likely that your mortgage lender will want to check your deposit amount before moving on to make you a mortgage offer. Typically, your saved deposit will transfer before contracts are exchanged to confirm the house has been bought.

This means the buyer and the seller are committed to the sale, so be aware that pulling out once the contracts have been signed could result in you losing your mortgage deposit.

Your conveyancer will be in charge of transferring your deposit, which is usually around 10% of the total house price, from your account to the seller for it to clear in time for the exchange.

Find out more about the mortgage application process.

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