Why Do You Need a Deposit For a Mortgage?

Buying your first home is an exciting step, but it comes with a lot of questions. One of the biggest ones is this: Why do you need a deposit for a mortgage in the UK? It’s a fair question, especially with house prices rising and saving up feeling harder than ever. So let’s break it down clearly, without the jargon.

What is a Mortgage Deposit?

A mortgage deposit is the chunk of money you pay upfront when buying a home. It’s usually expressed as a percentage of the property’s value. So, if you’re buying a house for £250,000 and you have a 10% deposit, you’d need to put down £25,000.

The rest of the money is borrowed from a mortgage lender – a bank or building society – who will want some reassurance that you’re serious and financially responsible. That’s where the deposit comes in.

Why Do You Need One?

It Shows You’re Committed

A deposit proves to lenders that you’ve managed to save a substantial amount, which suggests you’re likely to handle your mortgage payments sensibly. It’s like a sign of good faith. If you’re willing to invest your own money, they’re more comfortable lending you the rest.

It Reduces the Lender’s Risk

When a bank lends money, they’re taking on some risk. If you can’t keep up with repayments and they have to repossess the house, they want to know they’ll get their money back. A deposit lowers that risk. The bigger your deposit, the smaller the amount they’re lending – and the lower their risk.

You’ll Get Better Mortgage Deals

The more money you can put down, the more favourable mortgage deals you’ll have access to. With a higher deposit, you’ll often get a lower interest rate, which means lower monthly repayments and less paid overall. In short, a bigger deposit can save you thousands over the life of the mortgage.

You’re Less Likely to Fall Into Negative Equity

Negative equity happens when your mortgage debt is more than your home’s value – usually if property prices drop. A deposit gives you a cushion, making this less likely. With no deposit (or a very small one), even a slight dip in the market can leave you owing more than your house is worth.

How Much Deposit Do You Actually Need?

In the UK, most lenders ask for at least 5% of the property’s value. So for a £200,000 home, you’d need a minimum of £10,000. But more is usually better.

5% deposit – You’ll access standard mortgage products, but interest rates tend to be higher.

10% deposit – Opens up better deals and may improve your chances of getting approved.

15%–20% or more – This is where you start seeing the most competitive interest rates and better long-term value.

First-time buyers can sometimes get help through government schemes like the Lifetime ISA or First Homes Scheme, which can give your deposit a helpful boost.

Can You Get a Mortgage With No Deposit?

Technically, yes – there are 100% mortgages available in some cases, but they’re rare and usually come with strict conditions. These are sometimes aimed at people with family support, like guarantor mortgages where a relative helps secure the loan. But be aware: no-deposit mortgages tend to come with higher interest rates and tighter lending criteria.

So, why do you need a deposit for a mortgage in the UK?

In simple terms, it’s about trust, risk, and financial stability. It reassures the lender, helps you get better rates, and protects you in the long run. While saving for a deposit can be a challenge, it’s one of the most important steps towards owning your home.

If you’re planning to buy, start with a savings goal and look into help-to-buy schemes or savings products designed for first-time buyers. Every pound you save now could make a big difference later on.

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