In the UK in 2025, most buyers need at least a 5% deposit
Key concepts: deposit, LTV and rates Your deposit is the cash (or equity/discount) you put towards the property price, and the rest is covered by the mortgage. The loan-to-value (LTV) is the percentage of the property value you are borrowing, so a 5% deposit means a 95% LTV mortgage Lenders price mortgages in bands based on LTV, and lower LTV bands typically come with lower interest rates and more available products. Very high LTVs (90–95%) usually mean higher rates and tighter criteria because the lender is taking on more risk. Typical UK deposit ranges in 2025 Most mainstream lenders will consider deposits in the 5–40% range, but what you need depends on your situation and the property. Common ranges: 5% deposit (95% LTV): Available with specific 95% mortgages and schemes, but choice is limited and rates are higher. 10% deposit (90% LTV): Much wider choice of lenders and products, often noticeably better rates than at 95% LTV. 15–20%+ deposit (80–85% LTV): Often seen as a “sweet spot” for competitive pricing and broader criteria, especially if your credit isn’t perfect. How 5% vs 10% affects your mortgage Moving from a 5% to 10% deposit reduces your borrowing and your LTV, which generally helps in three ways. Better interest rate: For example, recent averages show that lower LTV bands (like 60–85%) are priced below higher LTV deals, reflecting lower risk for the lender. Lower monthly payments: A bigger deposit means a smaller loan, so even a modest rate improvement can significantly cut monthly costs. More lender choice: At 95% LTV you may be limited to a handful of products, whereas at 90% LTV more high‑street banks and building societies will consider your application. Current rate trends by LTV Average fixed‑rate deals in late 2025 show a clear pattern: higher LTVs cost more. Around 85% LTV: Recent 2‑year fixed averages are in the low‑to‑mid 4% range for home‑buyers with 15–25% deposits. Around 60% LTV: The same term at 60% LTV is noticeably cheaper, with 2‑year and 5‑year averages below many high‑LTV offerings. Although precise pricing changes weekly and varies by lender, this gap illustrates why stretching from a 5% to 10% deposit can pay back over the life of the deal. Right to Buy and council house mortgages A council house mortgage under the Right to Buy scheme works slightly differently because the discount can be treated as your deposit. The Right to Buy discount starts around 35% for houses and 50% for flats after 3–5 years of tenancy and can rise each year, up to a maximum of 70% or a cash cap. In 2025, maximum discounts are typically up to about £102,400 in England, higher (around £136,400) in London, subject to local caps. Many lenders will allow that discount to replace or reduce your cash deposit, meaning you could effectively get a 100% mortgage of the discounted price while still meeting their LTV rules. Which banks offer Right to Buy mortgages? Several high‑street banks and building societies offer right to buy mortgages, often with specific criteria. Examples include: NatWest – offers Right to Buy mortgages up to around 100% of the discount price or a capped percentage of market value, subject to affordability. Barclays – may lend up to about 95% of the discounted price, often with limits based on the property’s full market value. Halifax and Skipton Building Society – known for lending up to 100% of the discounted price in some cases, effectively treating the entire discount as the deposit. In total there are reported to be dozens of lenders, including some other high‑street names and specialist building societies, that will consider Right to Buy cases. Can you use a loan for a house deposit? Using a loan for mortgage deposit is possible in limited situations but is often discouraged and restricted. Many lenders prefer deposits to come from savings or a genuine gift, and some will simply decline applications where the deposit is clearly borrowed. A few lenders will consider an unsecured bank loan or similar, but they will factor the repayments into affordability calculations, which can reduce how much you can borrow. Lenders are generally more relaxed about raising your deposit by borrowing against another property you own, such as a remortgage or second charge, because this is secured lending. However, using credit cards or overdrafts as a deposit source is widely seen as very risky and is usually unacceptable. Minimum you should realistically aim for For many first‑time buyers, 5% is the minimum to access mainstream mortgages, but 10% is often a more sustainable target. At 5%: You can get on the ladder sooner, but you may pay higher monthly payments and be more exposed to rate changes at remortgage time. At 10%+ : You typically gain more choice, better pricing, and a cushion against small dips in property values, which can help when you come to remortgage. For buyers using right to buy mortgages, the effective “deposit” is the council discount rather than your savings, so the key is proving affordability on the loan amount rather than saving a large cash deposit. If you share your target property price and whether you’re a standard buyer or using a council house mortgage under Right to Buy, a tailored set of deposit and LTV scenarios can be mapped out for you. 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