Breaking into the property market doesn’t necessarily require a hefty deposit. Read on to discover how you can make it happen.
While most assume that the primary hurdle to homeownership is the deposit, you may be surprised to hear that you may not need to save up quite so much. For example, you could explore more budget-friendly locations, consider putting down a smaller deposit, or investigate the government schemes and incentives available. There are a number of alternatives and possibilities at your fingertips, and we’ll uncover more about each one.
Don’t be deterred by deposit size
When it comes to saving for a deposit, the key lies in having a clear understanding as to what you can realistically save and allocate to mortgage payments each month. It’s also crucial to grasp exactly how much owning a home will really cost you, as this will help to bridge the gap between making homeownership an aspiration and a reality.
What’s the minimum amount of deposit required?
A common perception around house deposits is that a specific sum must be saved as a prerequisite to determine your eligibility for a mortgage. However, the amount of deposit you’ll require hinges on your chosen property’s location and its value.
| Region | Average price for first time buyers | 5% deposit |
| London | £518,900 | £23,790.95 |
| North East | £175,091 | £7,590.70 |
| East Midlands | £238,202 | £10,510.15 |
| East of England | £303,166 | £15,158.30 |
| North West | £212,604 | £9,479.40 |
| South East | £362,730 | £16,029.55 |
| South West | £281,167 | £12,613.15 |
| West Midlands | £235,108 | £10,463.50 |
| Yorkshire and The Humber | £202,154 | £8,884.15 |
*Information published by Statista, 2023
Support is on hand, should you need it
You aren’t on your own in your quest to save up for a deposit. The government offers support through various schemes, including the Lifetime ISA*. Under this initiative, you can save up to £4,000 annually, and the government will provide a 25% bonus, potentially amounting to £1,000 in free funds. While this serves as an excellent starting point for prospective homebuyers, keep in mind that early withdrawals of funds prior to your first home purchase or retirement incur a 25% penalty.
*A Lifetime ISA could be a good way of saving for a deposit, but it’s best to speak with a financial adviser if this is something you are considering. As mortgage advisers, we cannot offer financial advice.
It’s about more than just the deposit
While a deposit is a prerequisite for securing a mortgage, it’s not the only criteria you’ll need to meet. Lenders also consider your ability to manage ongoing repayments, in addition to your deposit. They assess your financial situation by examining factors such as your income and expenditures, credit score, and any existing debt (such as car loans).
You don’t necessarily need a 10% deposit
If you’re eager to buy but are concerned about having the funds for a sizable deposit, get in touch with an adviser. They will be able to shop around for alternative mortgage solutions that allow you to step onto the property ladder sooner than expected. After a brief discussion, you might discover that a putting down 5% deposit is sufficient. Although this might limit your mortgage choices, it will still enable you to put your homeownership goals first. It may also mean that you gain more equity if the value of the property increases over time.
Our mortgage advisers are available to guide you through the process, helping you to find a deal that’s suited to your circumstances. Regardless of how distant your homeownership goals may seem, there’s no harm in having a conversation. You never know – you may find the outcome is much better than you expected!
Don’t stop saving once you’ve applied for a mortgage
Once you’ve had that all-important mortgage offer, remember that your deposit isn’t due until contracts are exchanged. This grants you additional time to bolster your savings, which can be allocated to expenses such as stamp duty and legal fees, or even furnishing your new home.
We’re here to help
As well as helping you to find the right mortgage, we can also support you in calculating a pre-house-hunting budget, and provide comprehensive guidance throughout the homebuying journey. Don’t be discouraged by the size of the deposit you think you’ll need, as there are a number of possibilities at your fingertips. Reach out to us today for insights into achieving your homeownership goals.
Download the Mortgage Advice Bureau App
Serving as a digital mortgage coach, our app can help you with savings, planning, and tracking your homebuyer status – whether you’re a first-time buyer or contemplating a move. We’ll guide you every step of the way, ensuring you’re well prepared for what lies ahead.