Saving for a house deposit can feel overwhelming, especially with rising house prices and the cost of living. But getting on the property ladder may be more achievable than you think.
In Episode 1 of On The Ladder, Sarah Tucker, founder of The Mortgage Mum and a regular contributor to This Morning, the BBC and The Times, breaks down exactly what a house deposit is, how much you really need in today’s market, and the mortgage schemes that could help you buy with a low or even no deposit.
She’s joined by Gemma Bennett, Acting Senior Mortgage Adviser at The Mortgage Mum, who shares practical insight from working directly with first-time buyers every day.
If you’re wondering how to save for a house deposit in the UK, this guide covers everything you need to know.
What Is a House Deposit?
A house deposit is the upfront cash contribution you put towards buying a property. It’s paid alongside your mortgage and directly affects:
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The mortgage deals available to you
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The interest rate you’ll receive
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Your monthly repayments
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Your likelihood of being approved
Your deposit is expressed as a percentage of the property’s value.
For example:
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Buying a £250,000 property
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5% deposit = £12,500
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10% deposit = £25,000
The remaining amount is borrowed as a mortgage.
How Much Deposit Do You Actually Need in the UK?
One of the biggest myths in the UK property market is that you need a 20% deposit to buy a home.
In reality, many lenders offer mortgages from 5% deposit (95% Loan to Value, or LTV).
Here’s what that looks like:
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5% deposit – Minimum for many first-time buyer products
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10% deposit – Opens up more competitive rates
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15–20% deposit – Access to lower interest rates and wider lender choice
While a larger deposit can mean better rates, waiting years to reach 15–20% isn’t always necessary. For many buyers, getting on the ladder sooner with 5–10% can make more financial sense.
A whole-of-market mortgage broker can help you compare both routes.
Strategic Ways to Save for a Deposit (Without Giving Up Everything)
You don’t have to eliminate every coffee or social plan to build a deposit. Saving strategically is far more effective than relying on restriction alone.
1. Set a Clear Target
Work backwards:
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What property price are you aiming for?
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What deposit percentage will you need?
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How long do you want to save for?
Clarity turns “I need to save” into a practical monthly plan.
2. Automate Your Savings
Treat your deposit like a non-negotiable bill. Set up a standing order the day after payday so you’re not tempted to spend it.
3. Use a Lifetime ISA (LISA)
If you’re aged 18–39, a Lifetime ISA can boost your savings by 25%. For every £4,000 saved annually, the government adds £1,000 (subject to eligibility and property price caps).
4. Consider a Gifted Deposit
Family members can gift part or all of your deposit. Lenders will require:
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A signed gifted deposit letter
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Confirmation it’s non-repayable
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Proof of funds
This can significantly shorten your saving timeline.
5. Increase Income, Not Just Reduce Spending
Side income, bonuses, tax rebates, selling unused items, or negotiating pay rises can accelerate your savings far more effectively than cutting small luxuries.
Low-Deposit & Alternative Mortgage Options for First-Time Buyers
If saving feels slow, there may be more options available than you realise.
5% Deposit Mortgages
Many lenders offer 95% LTV mortgages, allowing you to buy with just 5% upfront. These are ideal for first-time buyers with stable income and good credit history.
Shared Ownership
Homes England oversees shared ownership schemes, allowing you to:
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Buy a percentage of a property (e.g. 25–75%)
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Pay rent on the remaining share
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Purchase more shares over time (“staircasing”)
This reduces the deposit required because you’re buying a smaller portion of the home.
Guarantor Mortgages
A family member may support your application by:
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Acting as a guarantor
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Using their savings as security
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Adding their income to strengthen affordability
This can help buyers who are close to affordability limits.
Joint Borrower Sole Proprietor
This option allows a family member to go on the mortgage to boost affordability without being named on the property deeds.
Each option has pros and cons, so personalised advice is key.
How Lenders Assess Affordability
Your deposit is just one piece of the puzzle. Lenders also consider:
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Income (including bonuses or overtime)
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Existing debts
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Credit history
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Regular monthly commitments
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Dependants
Improving affordability may involve:
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Reducing credit card balances
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Avoiding new finance agreements
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Registering on the electoral roll
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Checking your credit report for errors
Even small adjustments can improve your borrowing potential.
Realistic Tips for Building a Deposit on a Lower Income
Buying on a modest salary is possible with the right structure.
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Start with an Agreement in Principle to understand your budget
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Look at areas with lower average house prices
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Consider buying with a partner or friend
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Explore new-build incentives
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Speak to a broker early — even before you’ve finished saving
Clarity creates momentum.
Take Your First Step On The Ladder
On The Ladder is a step-by-step series designed to guide UK first-time buyers through the property journey without jargon or confusion.
Episode 1 covers:
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What a house deposit really is
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How much you genuinely need
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Low-deposit and no-deposit routes
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Practical strategies to save faster
If you’re serious about buying your first home, the most powerful thing you can do is get clarity early.
Ready to explore your options? Speak to a qualified adviser at The Mortgage Mum and find out what’s possible for you.
Watch new episodes of On The Ladder every month.
Follow @the_mortgage_mum on Instagram and TikTok for ongoing expert guidance for first-time buyers in the UK.
Full Transcript:
Welcome to On the Ladder, the series that tells you everything you need to know about buying your first home. I’m Sarah Tucker, and in every episode I’m going to be guiding you through a different part of the process. This is On the Ladder, and you’re about to take the first step.
If you’re dreaming about buying your first home, chances are the first question that pops into your head is, “How on earth am I going to save the deposit?” And what exactly is a deposit anyway?
It’s one of the biggest worries for first-time buyers and one of the most misunderstood topics. So let’s clear a few things up.
When people hear the word deposit, they often think you need a massive 20% lump sum just to get started. But that isn’t true. Most lenders today will let you buy with as little as 5% of the property price, and in some cases you might not need a deposit at all.
So what exactly is a deposit?
Your deposit is the chunk of money you put towards the price of your home upfront, while your mortgage covers the rest.
For example, if a property costs £250,000 and you have a £25,000 deposit, you would borrow the remaining £225,000 from your lender. A lender could be a bank or building society that provides you with the mortgage.
The proportion of the property value that you borrow is known as Loan to Value (LTV). In this example, your deposit is 10%, meaning your LTV is 90%.
Most first-time buyers will pay a deposit of between 5% and 10% of the property value. However, the more deposit you can put down initially, the better the interest rates you are likely to be offered on your mortgage.
To break this down further, let’s look at an example.
Imagine you are buying a £250,000 home over a 25-year mortgage term.
A 100% mortgage, meaning no deposit, could have an average interest rate of around 6.25%, which would cost roughly £1,649 per month.
A 95% mortgage, requiring a 5% deposit (£12,500), may have an average rate of around 4.87%, which would bring the monthly payment to approximately £1,371.
A 90% mortgage, requiring a 10% deposit (£25,000), might have an average interest rate of 4.44%, giving a monthly payment of about £1,243.
An 80% mortgage, requiring a 20% deposit (£50,000), may have rates closer to 4.22%, which would bring monthly payments to around £1,080.
That’s a difference of more than £500 per month between having no deposit and having a 20% deposit.
Generally, the more deposit you can put down, the lower the interest rate you will be offered. Interest rates tend to keep improving until around 40% deposit, where they typically level out.
So yes, a bigger deposit gives you access to better interest rates and more mortgage options. But that doesn’t mean you should delay your homeownership plans if you have saved 5% or 10%, because that could still be enough to get started.
Your interest rate is the cost of borrowing money from your lender, shown as a percentage. Even a small change in interest rate can make a noticeable difference to both your monthly payments and the total cost of your mortgage over time.
So how much deposit do you actually need?
Start by looking at properties in the area where you’d like to live. Once you know the typical property prices, you can estimate your deposit.
Take the average property price and multiply it by 0.05 to estimate a 5% deposit.
This gives you a rough idea of what you might need to save.
However, remember that you might not need a deposit at all depending on the type of mortgage available to you.
Saving for a deposit can feel challenging, but there are ways to make it easier.
One option is opening a Lifetime ISA (LISA) if you are aged between 18 and 39. This is one of the most helpful savings tools for first-time buyers.
You can save up to £4,000 per year, and the government adds a 25% bonus. That means you could receive up to £1,000 extra every year.
This can be used towards purchasing a property worth up to £450,000, but the account must be open for at least 12 months before you buy.
If you expect your first property to cost more than £450,000, a Lifetime ISA may not be suitable, as there are penalties for withdrawing funds above this limit.
Another helpful strategy is automating your savings. Setting up a standing order on payday means you automatically move money into savings without having to think about it. Even small contributions can grow quickly over time.
Many first-time buyers also receive support from family members.
Some families help by providing a gifted deposit. If this happens, your lender and solicitor will require a letter confirming that the money is a gift rather than a loan.
If the money is intended to be repaid, lenders will treat it as a loan, which could affect how much you are able to borrow.
There are also several mortgage schemes designed to help buyers who may struggle to save a deposit, particularly if they are currently renting.
For example, the Track Record Mortgage from Skipton allows buyers to obtain a mortgage with no deposit if they have been renting for 12 of the last 18 months.
The Barclays Family Springboard Mortgage allows family members to place money into a savings account that earns interest for five years. Barclays then uses this as security for your mortgage.
Another option is the April 100% mortgage, which allows you to borrow the full value of the property without needing a deposit.
There are also schemes such as Deposit Unlock for new build homes and Shared Ownership, where you purchase a share of the property and pay rent on the remainder. Because you are buying only part of the property, the deposit required is often lower.
These options are designed to help buyers overcome one of the biggest barriers to homeownership.
A quick favour — if you’re finding this series helpful, please hit the subscribe button. The more the channel grows, the more people we can help get onto the property ladder.
You might also be wondering when you actually pay your deposit.
Many people assume it is paid as soon as their offer on a property is accepted. In reality, the deposit is usually paid just before exchange of contracts. At this point, your solicitor transfers the deposit to the seller’s solicitor.
If you are purchasing a new build property, you may pay a reservation fee earlier to secure the property.
It’s important that your deposit funds are held in a clear and traceable account before exchange.
The key message is simple: don’t let the idea of a deposit stop you from starting.
You might not need to save as much as you think. The most important step is understanding your options and getting professional guidance to create a plan.
Start by booking a conversation with a mortgage adviser. You can do this even if you are still years away from buying. Choosing an adviser early means they can guide you through every step of the journey.
Whether your deposit is £12,000 or £25,000, it forms the foundation of your home purchase. The sooner you start saving, the sooner you could be holding the keys to your first home.
This is On the Ladder, and you just took the first step.
Thank you for watching this episode of On the Ladder. Hit the subscribe button to be the first to know when the next episode drops, and leave any questions in the comments so we can cover them in future episodes.
This has been On the Ladder, and you just took the next step. See you next time.
