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Five per cent, if you are buying a home to live in and your circumstances are straightforward. Twenty five per cent or more if you are buying it to let. Somewhere between a quarter and a third for commercial property. And if you are buying at auction or funding a project, the whole idea of a deposit works differently. That spread is why the question is so hard to answer with one number. The deposit a lender wants depends far less on you than on what you are buying and why. Here is what you actually need for each type of purchase, what a bigger deposit buys you, where the money is allowed to come from, and what lenders will want to see before they accept it.
The Short Answer, by Property Type
A rough guide to typical minimums in the current market: Residential home, 5% at the very lowest, with meaningfully better rates from 10% and again at 15% and 25%. Buy-to-let, usually 20% to 25% minimum, with 25% the common starting point. HMOs and multi-unit blocks, often 25% to 30%. Holiday lets, usually 25% or more. Commercial and semi-commercial, generally 25% to 35%. Bridging finance, priced on loan to value rather than a deposit, typically up to around 70% to 75% of the property’s value. Development finance, measured against build costs and end value rather than a deposit at all. Treat these as starting points rather than promises. A lender’s minimum is what it will consider, not what it will offer you on the day.
Deposit and Loan to Value Are the Same Conversation
Lenders think in loan to value, not deposits. LTV is the loan as a percentage of the property’s value, so a 10% deposit is a 90% LTV mortgage. The two numbers always add up to 100. This matters because rates are priced in LTV bands, and the jumps between bands are where the real money sits. On a £250,000 purchase, a 5% deposit is £12,500 and puts you at 95% LTV, the most expensive band on the shelf. Find £25,000 and you are at 90%. £37,500 gets you to 85%. £62,500 puts you at 75%, which is where the sharpest mainstream pricing tends to start. The practical takeaway is that scraping together another couple of thousand is sometimes worth far more than it looks, if it tips you over a band. And going slightly past a band, say 12% when the next tier is at 15%, buys you nothing at all. Work out where the thresholds are before you decide how much to put in.
How Much Deposit for a Residential Mortgage
At 5% you are in the smallest pool of lenders and the highest rates, and the affordability assessment gets stricter because you are borrowing more relative to your income. It works, and plenty of people buy this way, but expect the monthly cost to reflect it. At 10% the choice opens up considerably and the pricing improves. For most first-time buyers this is the realistic target. At 15% to 25% you are into mainstream territory with the widest lender choice. At 25% and above you are getting close to the best pricing available, and beyond about 40% the improvements tail off. There are a small number of no-deposit and 100% products in the market, but they are not what they sound like. They generally need a family member to provide either a guarantee or savings held as security, or they rely on a track record of paying rent at or above the proposed mortgage payment. The deposit has not disappeared, it has just moved onto somebody else’s balance sheet.
Buy-to-Let and Specialist Property
If you are buying to let, expect to put in at least 20% and usually 25%. Two things then set the loan, not one: the LTV cap and the rental stress test, which checks that the rent covers the mortgage payment by a margin, commonly 125% to 145% at a stressed rate. On a low-yielding property the rent test bites first, and you end up needing a bigger deposit than the headline LTV suggests, whatever your income looks like. Our buy-to-let mortgage page goes into how those cases are assessed. Buying through a limited company works on similar deposit levels. HMOs, multi-unit blocks and holiday lets usually need a little more, because the lender pool is smaller and the properties are harder to value. For commercial and semi-commercial property the deposit is bigger again, and the lender is underwriting a business or a lease rather than a salary.
Auction, Bridging and Development Work Differently
This is where the word deposit stops meaning one thing. At auction there are two deposits. The 10% you pay on the day the hammer falls, which is contractual and non-refundable, and the cash you put into the purchase when you complete inside the 28 days that follow. People occasionally confuse the two and get a nasty surprise. Our auction finance page sets out how the funding is arranged before you bid. With bridging finance there is no deposit as such. The lender sizes the loan against the property’s value, commonly up to around 70% to 75%, and you fund the gap. The useful part is that the gap does not always have to be cash. If you have equity in another property, a lender will often take that as additional security instead, which is how buyers with plenty of equity and very little spare cash still get deals done. With development finance the lender funds a proportion of the land purchase and the build costs, drawn down in stages and sized against the end value of the scheme. Your contribution is measured as a share of total costs rather than a deposit on a price.
Where a Deposit Is Allowed to Come From
Lenders care about the source as much as the size. Acceptable sources include your own savings, a gifted deposit from a family member, equity released from another property you own, the proceeds of a sale, an inheritance, or funds from a business you own. Equity is the most under-used of those. Raising money against a property you already hold, either by remortgaging or with a second charge behind an existing mortgage, is often how a second purchase gets funded without touching savings. If money is tied up in an estate that has not yet been settled, an inheritance or executor loan can release funds before probate completes. What lenders will not accept: undocumented cash, and in most cases a personal loan or credit taken out to fund the deposit, since it changes your affordability and the lender will see it on your credit file anyway.
Proving It
Have this ready before you apply, because it holds up more purchases than anything else. Lenders want to see three to six months of bank statements showing the money and where it came from. A gifted deposit needs a letter from the person giving it, confirming it is a gift rather than a loan and that they retain no interest in the property. Money held overseas, converted from crypto, or arriving as a lump sum from a source that is not obvious will need a clear paper trail. Start collecting it early. Gathering statements while a seller waits is a miserable way to spend a fortnight.
What Each Extra £10,000 of Deposit Is Actually Worth
It helps to see the arithmetic rather than talk about it in the abstract. Every £10,000 you add to the deposit is £10,000 you do not borrow, and on a 25 year repayment mortgage at a rate of around 4.5% to 5%, that works out at roughly £55 to £60 a month off the payment, or somewhere near £17,000 across the full term once the interest is counted.
Then there is the second effect, which is usually the bigger one. If that same £10,000 also drops you into a lower LTV band, you are not just borrowing less, you are borrowing at a better rate on the whole balance. That is why the last few thousand before a threshold is worth chasing and the first few thousand after it is not.
Run it the other way before you commit. Work out the payment at your current deposit, then at the next band down, and compare the difference against what that money would do sitting in your account. On a home you plan to keep for twenty years, the lower rate usually wins. On an investment property you intend to refinance in two years, or a project that needs a working budget, keeping the cash often wins instead.
Bigger Deposit or More Cash in Hand?
More deposit is not automatically the right answer. Putting every penny in to reach the next LTV band leaves nothing for the costs that land straight after completion, and there are more of those than people expect: stamp duty, legal fees, survey and valuation, lender arrangement fees, moving costs, and on an investment purchase, whatever the property needs before a tenant will pay for it. The sensible way through it is to work out the LTV thresholds that actually change your rate, aim for the nearest one you can comfortably reach, and keep the rest. A slightly higher rate with money in reserve beats a perfect rate and an empty account.
The Clever Way to Work Out Your Deposit
The honest answer to how much deposit you need is that it depends on what you are buying, how you are holding it and which lender you put it to. A residential purchase has a fairly clear ladder. A portfolio purchase, a mixed use building, a project or an auction lot does not, and the deposit that one lender insists on is often well above what another would accept for the same deal. That is the part we do. Tell us what you are buying, what you have available and where it is coming from, and we will come back within 24 business hours with a straight answer on what you will need and which lender fits. Send it over and do the Clever thing. Your property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Frequently Asked Questions
There are a small number of 100% products, but they almost always need a family member to provide a guarantee or savings held as security, or a documented history of paying rent at or above the proposed mortgage payment. For most buyers, 5% is the practical minimum.
Money given to you towards a purchase, usually by a family member, with no expectation of repayment and no stake in the property. Lenders accept them routinely, but they will want a signed letter from the person giving it and evidence of where the money came from.
Usually more than for your main residence, commonly 15% to 25%, depending on the lender and whether the property will be let. There are also higher stamp duty costs on additional properties, which sit on top of the deposit rather than inside it.
At 5% that is £15,000, at 10% it is £30,000, at 15% £45,000 and at 25% £75,000. The jumps matter because rates are banded, so the move from £30,000 to £45,000 usually buys a better rate than the move from £30,000 to £36,000.
£10,000 at 5%, £20,000 at 10%, £30,000 at 15% and £50,000 at 25%. Remember to budget separately for legal fees, valuation, any lender fee and stamp duty if it applies, since none of those come out of the deposit.
The evidence a lender asks for to confirm you hold the money and that it came from a legitimate source. Usually three to six months of bank statements, plus a gift letter if any of it has been given to you, or completion statements if it came from a sale.
Often yes. Equity in a property you already own can be released by remortgaging or with a second charge, and used as the deposit on the next purchase. On bridging, a lender will frequently take a charge over the other property as additional security instead of cash.
No, because the equity you already hold takes its place. The lender works out your loan to value from the property's current value and your outstanding balance, so the more equity you have built up, the better the rates available to you.