The Minimum: 5% Deposit
You can buy a home in the UK with as little as a 5% deposit. On a £250,000 property, that's £12,500. However, there are trade-offs:
- Higher mortgage rates — typically 0.5–1.0% higher than with a 10% deposit
- Fewer lender options — not all lenders offer 95% LTV mortgages
- Risk of negative equity — even a small price drop puts you underwater
- Higher monthly payments — you're borrowing more
How Deposit Size Affects Your Mortgage
Here's how different deposit levels change the picture on a £250,000 property:
| Deposit | Amount | Typical Rate | Monthly Payment | Total Interest (25yr) |
|---|---|---|---|---|
| 5% | £12,500 | 5.0% | £1,389 | £179,200 |
| 10% | £25,000 | 4.3% | £1,219 | £140,700 |
| 15% | £37,500 | 4.1% | £1,119 | £123,200 |
| 20% | £50,000 | 3.9% | £1,043 | £112,900 |
The 10% Sweet Spot
The biggest rate improvement comes between 5% and 10%. Going from 5% to 10% typically saves you 0.5–0.7% on your rate, which translates to £170/month and £38,500 in total interest over 25 years. The jumps from 10% to 15% and 15% to 20% are smaller. If you're close to 10%, it's usually worth the wait.
How Long Does It Take to Save?
Here's how long it takes to save a deposit at different savings rates, assuming a £250,000 property:
Saving £500/month
| Deposit Target | Amount | Time to Save |
|---|---|---|
| 5% | £12,500 | 2 years 1 month |
| 10% | £25,000 | 4 years 2 months |
| 15% | £37,500 | 6 years 3 months |
| 20% | £50,000 | 8 years 4 months |
Saving £1,000/month
At £1,000/month (realistic for a couple both saving), the timelines halve — a 10% deposit in just over 2 years.
Don't Forget the Extra Costs
Your deposit isn't the only upfront cost. Budget for an additional £3,000–£5,000 on top:
- Solicitor fees: £1,500–£2,000
- Survey: £400–£700
- Mortgage fees: £0–£1,000
- Moving costs: £500–£1,500
First-time buyers on properties up to £300,000 pay no stamp duty, saving thousands compared to second-time buyers.
Where to Keep Your Deposit Savings
Lifetime ISA (LISA)
The best option for most first-time buyers under 40:
- Save up to £4,000/year and get a 25% government bonus (up to £1,000 free per year)
- Available to ages 18-39
- Property must be under £450,000
- Must have been open for 12 months before you can use it
- 25% penalty if you withdraw for non-property purposes
LISA Boost Example
Save £4,000/year into a LISA for 4 years:
- Your savings: £16,000
- Government bonus: £4,000
- Interest (at ~4%): ~£1,300
- Total: ~£21,300 — that's over 8% deposit on a £250k home
The 25% bonus is effectively a guaranteed return that no other savings product can match.
Cash ISA
Good for savings above the £4,000 LISA limit. Rates of 4-5% (tax-free) are available in 2026. Use this alongside a LISA for faster deposit building.
Regular Savings Account
Some banks offer 5-6% on regular savers (limited to £200-£500/month deposits). Worth using alongside ISAs for the best combined return.
Realistic Salary-Based Scenarios
Single Buyer on £30,000
- Take-home: ~£2,050/month
- Realistic savings: £400/month (after rent and bills)
- Max mortgage (4.5x salary): £135,000
- Affordable property: ~£150,000 with 10% deposit
- Deposit needed: £15,000
- Time to save: ~3 years (with LISA bonus bringing it closer to 2.5 years)
Couple on £55,000 Combined
- Combined take-home: ~£3,650/month
- Realistic savings: £1,000/month
- Max mortgage (4.5x income): £247,500
- Affordable property: ~£275,000 with 10% deposit
- Deposit needed: £27,500
- Time to save: ~2 years (with both maxing LISAs)
Tips to Build Your Deposit Faster
- Open a LISA immediately — even with £1. The 12-month clock starts ticking from the day you open it, not from when you start saving seriously
- Automate your savings — set up a standing order on payday so saving happens before spending
- Track your spending — use a budget planner to find areas to cut. Most people find £100-£200/month they didn't realise they were spending
- Consider a savings challenge — some people save aggressively for 1-2 years by cutting to essentials only
- Use windfalls wisely — tax refunds, bonuses, and gifts can accelerate your timeline significantly
- Look into family support — gifted deposits are common. If family can help, even a small amount makes a big difference to your rate
The Bottom Line
The "right" deposit is whatever gets you on the ladder at terms you can sustain. A 5% deposit works if the monthly payments are affordable, but pushing to 10% unlocks meaningfully better rates and gives you more protection against price drops.
Start saving as early as possible, use a LISA for the free 25% bonus, and remember to budget for the extra costs beyond the deposit itself.
Use our mortgage affordability calculator to see what you can borrow, or try the buy vs rent calculator to see if now is the right time for you.