How Much Deposit Do You Really Need in 2025?
If you're planning to buy a home in 2025, one of the first questions you'll ask is: “How much deposit do I need?” While the traditional advice suggests 10% is standard, the reality is more nuanced. In this guide, we'll explore the minimum deposit requirements, the impact of your deposit size on mortgage rates, and the emerging option of 100% (no deposit) mortgages.
1. The Absolute Minimum Deposit in 2025
5% Deposit Mortgages: If you're looking for the smallest possible figure, many UK lenders offer mortgages requiring just a 5% deposit. For instance, on a £250,000 property, a 5% deposit equates to £12,500. These are most popular among first-time buyers, although also available to home movers and those remortgaging.
Eligibility Criteria: To qualify for a 5% deposit mortgage, lenders typically assess your credit score, income stability, and the property's value. A strong financial profile can improve your chances of approval.
2. The Return of 100% Mortgages: A Controversial Option
In a surprising development, 100% (no deposit) mortgages are cautiously reentering the UK market. These loans allow borrowers to purchase a home without any upfront deposit. However, they come with significant considerations:
Higher Interest Rates: Lenders perceive these loans as higher risk, so their rates reflect that.
Affordability Assessments: Lenders require stringent affordability checks to ensure borrowers can manage repayments without a deposit buffer.
Credit Assessments: Prepare to be looked at under a microscope; your credit history needs to be squeaky clean.
Potential for Negative Equity: Without a deposit, any decline in property value could lead to owing more than the home's worth.
Guarantor Requirements: Some 100% mortgage products may require a family member to act as a guarantor, adding an extra layer of responsibility.
These mortgages are being offered by select lenders, targeting first-time buyers. While they provide an alternative route to homeownership, they carry risks that should not be overlooked.
3. Why Many Buyers Aim for 10–15% Deposits
Once you've got a 10-15% deposit, things start looking a lot friendlier:
Better Mortgage Rates: A 10–15% deposit (90–85% Loan-to-Value) often unlocks lower interest rates, reducing monthly payments.
More Lender Choice: A larger deposit increases your appeal to a broader range of lenders.
Higher Approval Chances: A substantial deposit can make you a more attractive candidate, especially if your credit history isn't flawless.
4. 20%+ Deposits: The “Sweet Spot” for Rates
Lowest Interest Rates: Deposits of 20–25% (80–75% LTV) typically secure the most competitive rates.
Significant Savings: The lower the LTV, the less risk for lenders, often translating to substantial savings over the mortgage term.
5. First-Time Buyer Schemes in 2025
Government-backed options can help reduce the upfront deposit:
First Homes Scheme: Offers a discount on new-build homes for eligible buyers.
Shared Ownership: Buy part of a property and pay rent on the rest, lowering the deposit.
Lifetime ISA (LISA): 25% government bonus on your savings (up to £1,000 a year).
6. How Your Deposit Size Affects Lender Decisions
Lenders view larger deposits as:
Lower Risk: Less chance of default and negative equity.
Financial Responsibility: Indicates good money management.
More Flexibility: Greater borrowing options and potential for better deals.
7. How to Save Your Deposit Faster
We wish we could give you a secret hack to double your savings overnight, but the reality is, there’s no magic button. If there was, we’d be using it ourselves and probably blogging from a beach somewhere.
The truth? You’re probably already doing most of the right things. The best we can do is help you refine them:
Automate your savings: Set up a standing order the day after payday so the money disappears before you notice it.
Track the “invisible spending”: Those subscription renewals, app purchases, and Friday night takeaways add up (yes, we know you know this).
Use government bonuses: If you’re eligible for a Lifetime ISA, grab the free 25% bonus, it’s one of the few actual “boost” buttons available.
Put extra income straight to savings: Overtime, side hustles, birthday cheques from Grandma...they all count.
Keep savings out of reach: Use an account you can’t easily dip into unless you’re really committed to that house deposit.
💡 Our advice in a nutshell: Be patient, keep going, and know that the slow, steady stuff really is what works (even if it feels like you’re moving at a snail’s pace).
8. Don’t Forget Additional Costs
Your deposit isn't the only upfront cost. Budget for:
Stamp Duty (if applicable)
Solicitor’s Fees
Survey Costs
Mortgage Arrangement Fees
Moving Costs
FAQs: Deposits in 2025
Q: Can I use a gifted deposit?
Yes, most lenders accept them, but you'll need a signed letter from the person gifting the money confirming it's not a loan.
Q: Will a bigger deposit always get me a mortgage?
Not necessarily, lenders still assess your income, outgoings, and credit history.
Q: Is it better to save a bigger deposit or buy sooner?
It depends on market conditions, interest rates, and how fast you can save. Speak to a mortgage adviser to compare scenarios.
Final Word
In 2025, while you could technically buy a home with no deposit (in very specific circumstances) or as little as 5%, aiming for 10–20% or more often saves you thousands in the long run. If you're unsure what's best for your situation, speak to a mortgage adviser to explore your options.
📩 Need tailored advice? We can help you understand your deposit options, find the right lender, and package your mortgage application. Book a free Intro Call here to get things moving.
