Getting a mortgage can be a stressful experience. It’s especially daunting if you’re worried about having a low deposit.
When it comes to getting a mortgage, the amount you’ll be able to borrow will depend on a few different things. This includes how much money you can put down up front, known as a deposit. But saving for a big deposit isn't always possible for a lot of people.
In this Guide, you’ll find all you need to know about mortgage deposits and what your options are if you can’t save a lot of money.
In this Guide:
It’s possible to get a mortgage with a small deposit, but it will depend on your individual circumstance and what your Loan to Value ratio (LTV) is.
LTV tells you what percentage of your mortgage is a loan, compared to how much the property you’re buying is worth. For instance, if you have a 10% deposit, then you’ll need a 90% LTV mortgage. If you have a 15% deposit, then you’ll need an 85% LTV mortgage and so on.
Your LTV directly impacts which mortgage rates you’ll get. Generally, the higher your LTV then the higher your interest rate will be. This is because there’s more of a risk to lenders when you borrow a lot of money. They’re investing in your property, and there’s a risk that your home could decrease in value, making for a bad investment.
Getting a mortgage with a small deposit is definitely possible, but you’ll have fewer options than if you had a bigger deposit. If you need a mortgage but don’t have a lot of money to put down upfront, it’s a good idea to work with a specialist mortgage broker.
Our Mortgage Experts live and breathe the mortgage market - they’ve seen it all. They’ll know which lenders are most likely to accept you, and will make your application look as attractive as possible. Make an enquiry to find out your options.
Some high street banks will ask you to have a bigger deposit if you have bad credit. However, there are specialist lenders offering bespoke mortgages for people with bad credit scores. These mortgages are underwritten especially for you and your unique circumstances. Specialist lenders consider people on a case-by-case basis, and are experts in providing tailored mortgages for people with complex financial history.
Mortgages from specialist lenders aren't usually available directly to you as a borrower - you need to go through a specialist mortgage broker.
A specialist mortgage broker can find the right mortgage for you at the right rates, and prepare your application so it looks as good as possible to a lender. If you're worried about bad credit affecting your mortgage deposit, get in touch to find out your options.
A lot of mortgage lenders aren't set up to deal with earnings that aren’t the typical 9-5. Because your income isn't as straightforward it can be harder to verify. You might be asked to put down a larger deposit as a self-employed person.
Our Mortgage Experts can look at your options and find the right mortgage for your needs. Get started.
Probably not. You usually have to put down a minimum deposit of 25% on a Buy to Let mortgage. A lender needs to know if you can afford the extra costs. If you’re thinking about Buy to Let, putting down a bigger deposit will unlock the better interest rates. Read how Buy to Let mortgages are different from other mortgages.
Not at the moment. Mortgages without a deposit - known as 100% mortgages - are not common at all. Some specialist lenders may occasionally offer them. But at the moment, there are no 100% mortgages on the market.
You’d probably need to have a perfect credit history to be considered if they ever do come back on the market. And they’re likely to only come onto the market in times of very strong national financial stability.
If you don’t have a deposit and need a mortgage, you could consider a guarantor mortgage. This is where someone legally agrees to pay your mortgage if you can’t. This is a serious commitment - your guarantor could potentially lose their home if payments aren’t made.
100% mortgages are risky for lenders, and if you're a first time buyer then you probably won't be approved, because lenders can’t look at your past mortgage repaying behaviour. If 100% mortgages come back on the market, you’ll probably have to pay much higher interest rates than a mortgage with a deposit.
Currently, the minimum deposit you need to get a mortgage is 5% of the property value. In early 2021, the UK government announced the Mortgage Guarantee Scheme, where they help mortgage lenders with part of the loan. If you go to a lender who's signed for the scheme, you won't necessarily need to save for a large deposit, or be restricted to new-build homes in order to get on the property ladder.
So if you wanted to buy a property worth 200,000, the minimum amount of deposit you’d need is 5% of this, which is £10,000.
You can read more about mortgages with a 5% deposit in our Guide: How to Get a Mortgage With 5% Deposit.
If you’re ready to be a homeowner but are concerned about having a low deposit, there are a few options available to help you:
Help to Buy
Help to Buy provides you with a government loan to put towards the cost of a new build home in England. The loan ranges from 5-20% of the property value (40% in London), and you'll need to purchase your home from a registered Help to Buy homebuilder.
Help to Buy isn’t available in Northern Ireland, and the Scottish and Welsh schemes work slightly differently from the English version. Read more in our Guide: Help to Buy Explained
The good thing about an equity loan to buy your first home is that you won’t need to borrow as much on a mortgage. Meaning you could get cheaper rates than if you were otherwise taking out a 95% LTV mortgage.
The downside is that a lot of mortgage deals aren’t accessible to you if you’re using Help to Buy. It’s still possible to get a good rate, you’ll just need some advice from a mortgage broker who has experience with Help to Buy. A specialist broker knows the whole of the market, and will know how to get the best right deal for you. If you’re considering Help to Buy and want to know your options, make an enquiry to speak to one of our Mortgage Experts.
Shared Ownership is where you buy part of a property and rent the rest. You take out a mortgage on the bit you're buying, then pay a reduced rent on the bit you don't own. You’re able to buy between 25-75%, and can buy some or all of the remaining share when you can afford to.
This means you only need to put a deposit down on the bit that you’re buying, rather than the cost of the whole home. Read more about Shared Ownership.
Right to Buy
If you’re a council tenant in England, you could be eligible to purchase your home through the Right to Buy scheme. Right to Buy lets you buy your council home for a discounted price - most lenders will then accept your discount in place of a deposit. Read more about Right to Buy.
Ask a family member to gift you a deposit
If you’re struggling to save for a deposit but have family that can help, then you could look at using a gifted deposit. You can’t technically ‘borrow’ a deposit from a family member, but it can be ‘gifted’.
Lenders will want to know that you won’t have to pay back a deposit on top of your other outgoings. You might have to provide written evidence, signed by the person giving the deposit money to you.
Get a guarantor mortgage
If you’re struggling to save for a deposit, you could apply for a guarantor mortgage. A guarantor mortgage is where someone else agrees to pay your mortgage if you can’t.
The person that you ask to be your guarantor won't own any share of your property, they’re just agreeing to pay if you can’t. It's not something to take lightly - if you can’t make your repayments then your guarantor could lose their home. The person you ask should be someone you trust, and someone who’s financially secure.
Buy with friends or family
Buying a house with friends or a family member is becoming a popular way to get on the property ladder. Combining deposits and sharing all the monthly living expenses can be appealing.
It’s a big commitment though - you'll be jointly responsible for the mortgage payments. If one of you can't pay, you'll have to cover the cost. You also can't sell the property unless everyone on the mortgage agrees.
If you need a mortgage but have a low deposit, it’s a really good idea to work with a specialist mortgage broker. Our Mortgage Experts have access to the lenders who’ll look at your application and consider your unique circumstances. They’ll help you through the entire journey, from application right through to completion. They know the market, and will make your application look as appealing as possible to lenders. Get started.
Our Mortgage Experts are fully-qualified with experience in bad credit, self-employed and complex mortgages. They have a proven track record of getting mortgages for people who’ve been rejected elsewhere.
Applying for a mortgage or understanding your options shouldn't be confusing, yet there are just so many myths doing the rounds and it's not easy to know where to turn to get the right advice.
Our calculators give you an idea of what you might be able to borrow, what's affordable and a rough estimate of the kind of property prices you can start to look at.
Talk to our Mortgage Experts to find out your options