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Learn how mortgage deposits work, how much you may need, acceptable sources, proof of funds and example deposit amounts for UK property prices.
Jan 12, 2026
A mortgage deposit is the part of the property price that you provide yourself. The lender supplies the remaining amount as the mortgage. Your deposit counts towards the purchase price, but it is not included in the mortgage loan.
For example, if a home costs £300,000 and you have a £30,000 deposit, the mortgage required is £270,000. The deposit is 10% and the mortgage is 90% loan-to-value, usually shortened to 90% LTV.
Many standard residential mortgages require at least a 5% deposit, although some limited no-deposit options exist and some applicants or properties need more. A larger deposit reduces the loan-to-value and can give you a wider product choice or lower rate, but it does not guarantee approval. The deposit can come from sources such as savings, a family gift, inheritance, a Lifetime ISA, sale proceeds or equity, subject to lender and solicitor checks. Keep a clear paper trail because both the lender and conveyancer may ask where the money came from.
The deposit counts towards the property price, not the mortgage balance.
Property price = deposit + mortgage
If the property costs £250,000 and you provide £25,000, the lender would need to provide £225,000. You do not add the £25,000 deposit on top of a £250,000 mortgage.
An Agreement in Principle usually focuses on the amount a lender may be prepared to lend. You may also be asked for the intended property price and deposit so the lender can calculate the loan-to-value.
The AIP is not evidence that the deposit has been approved. The lender and solicitor can still ask for proof of the amount and source during the full application and conveyancing process.
Many standard residential products begin at a 5% deposit, which is a 95% LTV mortgage. This is not a universal rule. The minimum can depend on:
Limited 100% or family-assisted mortgages may be available in some circumstances. They normally have specific eligibility rules and should not be treated as the standard starting point.
Loan-to-value compares the mortgage with the property's value. You can calculate it like this:
Mortgage amount ÷ property value × 100 = LTV
A £270,000 mortgage on a £300,000 property is 90% LTV. Your £30,000 contribution is a 10% deposit.
A lower LTV can reduce the lender's risk. It may give you more lender or product choices, but mortgage pricing does not improve by the same amount at every percentage. Lenders use product bands, and these can change. Ask what difference the next realistic deposit band would make before tying up all your savings.
These examples show the deposit and mortgage required. They do not include buying costs and do not confirm that the mortgage will be affordable.
Use the MBNM mortgage calculator to test a property price, mortgage amount, term and interest rate. A calculator gives an estimate and does not apply every lender's affordability or property criteria.
These terms are often confused because both are called a deposit.
This is your total contribution to the purchase price. It reduces the amount you need to borrow and determines the loan-to-value.
In England, Wales and Northern Ireland, this is the amount transferred through your solicitor when contracts are exchanged. It is commonly 10% of the purchase price, although a smaller amount can sometimes be agreed.
The exchange deposit normally forms part of your total mortgage deposit. It is not an additional percentage on top. Your solicitor will calculate what is due at exchange and what remains due for completion.
You buy for £300,000 with a total mortgage deposit of £45,000 and a mortgage of £255,000. If the seller accepts a 10% exchange deposit, your solicitor sends £30,000 at exchange. The remaining £15,000 of your contribution is then included in the completion funds.
The position is different in Scotland, where the legal process uses missives rather than an exchange of contracts. Follow your solicitor's instructions about when funds must be available.
You normally transfer the money to your solicitor before exchange or completion, following their instructions. Do not send a large sum to bank details received only by email without independently checking them with the solicitor. Payment diversion fraud can target property transactions.
If your deposit is spread across accounts, investments or gifts, tell the solicitor early. Moving everything at the last minute can make the source harder to evidence.
Acceptable sources vary by lender and the legal checks required. Common sources include:
Regular savings from salary or other declared income are usually straightforward when bank statements show how the balance built up.
An eligible first-time buyer may use money and the government bonus from a Lifetime ISA, subject to the account, property and withdrawal rules. Tell your conveyancer early because they must follow the withdrawal process. Check the current rules on GOV.UK.
A family member may be able to give you some or all of the deposit. The lender normally wants confirmation that it is a genuine gift, does not have to be repaid and does not give the donor an ownership interest in the property.
Inheritance may be accepted. Be prepared to provide estate or solicitor documents and the bank trail showing receipt of the money.
Home movers commonly use equity released from a sale. The solicitor coordinates the sale and purchase funds when transactions are linked.
Proceeds from investments, shares, a vehicle, another property or another asset may be considered. You may need ownership, sale and bank evidence.
Money saved from a bonus or commission can form part of the deposit. Payslips, bank statements or employer evidence may be requested.
A remortgage does not normally need a cash deposit. The difference between the property value and the mortgage is your equity, which performs a similar role in the loan-to-value calculation.
Do not assume a source is acceptable because the money is already in your account. Check it before applying, particularly if it comes from another person, a business, overseas or a loan.
These checks answer two related questions:
A current account balance can prove that money is present but not necessarily explain its origin. The lender and solicitor have different responsibilities, so one may request documents even if the other has already checked them.
Evidence may include:
There is no single statement period that applies to every case. The lender or solicitor may request more history if the money appeared recently or the source is complex.
Gifted deposits create many of the questions buyers raise online. The exact rules vary, but expect to confirm:
Do not describe a loan as a gift. If repayment is expected, disclose it. The monthly commitment and legal arrangement can affect affordability and lender acceptance.
Possibly, but an early transfer does not remove the checks. Keep the statements showing the money leaving the donor's account and arriving in yours. Ask your adviser and solicitor before moving it if possible.
Potentially. The lender and solicitor may apply additional checks based on the country, currency and source. They may need translated or certified documents and a complete transfer trail. Raise this early because it can take longer.
Physical cash is difficult to verify because a bank deposit shows when it entered the account, not where it came from. You may need evidence of how it was earned or acquired. Speak to the solicitor before paying in large amounts of cash.
Acceptance varies. You may need wallet records, exchange statements, trade history, evidence of the original investment and bank statements showing the proceeds. Some lenders or solicitors may not accept crypto-derived funds.
A company director or business owner may be able to use dividends, drawings or other legitimately withdrawn funds, but lender, tax and company-law considerations can apply. Check with your accountant and mortgage adviser before moving business funds.
Many lenders do not accept an unsecured loan as the deposit. Where borrowed funds are considered, the borrowing must be disclosed and its repayment can reduce affordability. Using credit without telling the lender can lead to a decline or later withdrawal of an offer.
Cashback, deposit contributions and other incentives on a new build must be declared. Lenders can limit the incentives they accept or change the value used for lending.
Many first-time buyers use savings, a Lifetime ISA or a family gift. A 5% deposit may be possible on a suitable standard property, subject to affordability and lender criteria. Read our first-time buyer process guide.
The deposit is usually calculated against the share you are buying, not the full open-market value. If a home is worth £300,000 and you buy a £75,000 share, a 10% deposit on that share would be £7,500 and the mortgage would be £67,500. Rent and service charges on the remaining share are also considered in affordability.
See our Shared Ownership mortgage guide.
Some lenders apply different maximum LTVs to new-build houses and flats. Reservation deadlines and incentives also need to be checked before you commit.
Buy-to-let deposits are normally larger than residential deposits, often around 20% to 25% or more. The required amount depends on the lender, property, rental calculation and applicant.
Being self-employed does not automatically mean you need a larger deposit. The lender still needs enough acceptable evidence of sustainable income. A larger deposit may widen the options, but it cannot replace affordability.
These are simplified examples, not real client cases or promises of approval.
A buyer wants a £240,000 home and has £12,000 for the deposit. The required mortgage is £228,000 at 95% LTV. The lender must still decide whether the loan is affordable and whether the property meets its rules. The buyer also needs separate money for legal fees, a survey, moving and any tax due.
A couple buying for £350,000 have £20,000 of savings and receive a £15,000 gift. Their total deposit is £35,000, or 10%, and the required mortgage is £315,000. The donor may need to sign a declaration and evidence the source of the £15,000.
A self-employed buyer has a 20% deposit. The lower LTV may help with product choice, but the lender still checks the trading history, income evidence, commitments and property. The deposit does not compensate for a mortgage that fails affordability.
A buyer receives part of the deposit from a parent abroad. The lender and solicitor may need donor identification, foreign bank statements, the reason for the gift, translated documents and records of the international transfer. Starting the checks before an offer can reduce the risk of delay.
False. The deposit and mortgage together fund the purchase price.
False. Some residential options start at 5%, and limited no-deposit routes can exist. Other cases require more.
False. The lender and solicitor may need to trace the original source.
False. If repayment is expected, it is a loan or another financial arrangement and must be disclosed.
False. Affordability, credit history, income evidence and property acceptability still matter.
Many standard residential products start at 5% of the property price, but this depends on the applicant, lender, product and property. Some limited no-deposit options exist, while other cases require 10%, 15% or more.
A 5% deposit is £15,000, 10% is £30,000, 15% is £45,000 and 20% is £60,000. The corresponding mortgage would be £285,000, £270,000, £255,000 or £240,000.
Yes. A larger deposit means a smaller mortgage for the same purchase price.
Potentially. The lender and solicitor will usually require a gifted deposit declaration and may ask the donor for identification, bank statements and evidence of the source.
Many lenders will not accept this. Where it is considered, the loan must be disclosed and its repayments can affect affordability. Never present borrowed money as savings or a gift.
There is no universal period. A lender or solicitor can still ask about the original source even if the money has been held for months or years. Keep the supporting records.
Each building society has its own products and criteria, just like other lenders. Some may offer 95% LTV or specialist options, while others require a larger deposit for a particular property or applicant.
Yes. We can review savings, gifts, inheritance, overseas funds, asset sales, business income and other sources, then check which lender criteria may fit. Your solicitor makes the separate legal and source-of-funds checks.
Mortgage Brokers Near Me helps first-time buyers, home movers, self-employed applicants, contractors, buyers using gifted deposits, Shared Ownership applicants and people with more complex income or credit histories.
We can:
Our first chat is free. We use it to understand your requirements and whether we can help. If we can help, we will then explain and discuss our fees with you.
There are no hidden fees, and we will not move ahead with anything until the fees have been agreed.
Speak to an MBNM mortgage adviser, call 0203 4884 491 or email enquiries@mbnm.co.uk.
Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.
Mortgage Brokers Near Me Ltd is an Appointed Representative of The Right Mortgage Ltd, which is authorised and regulated by the Financial Conduct Authority. The FCA does not regulate some forms of buy-to-let mortgage. This article provides general information and does not constitute personalised mortgage, legal or tax advice.
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Near you, no matter where you are.
Appointed Representative of The Right Mortgage Network (FCA No. 1004260). Company No. 15189091. Registered in England and Wales.
