How much deposit do I need to buy a house as a first time buyer?

As a first-time buyer in the UK, the minimum deposit required to purchase a property is typically 5% of the property’s purchase price. This means, for a home valued at £250,000, you’d need at least £12,500 as a deposit.

Why a Larger Deposit Can Be Beneficial

• Access to better mortgage rates: Lenders often offer more favourable interest rates to borrowers with larger deposits, as they represent a lower risk.
• Lower monthly repayments: A bigger deposit reduces the amount you need to borrow, leading to more manageable monthly payments.
• Increased mortgage approval chances: A substantial deposit can improve your loan-to-value (LTV) ratio, making you a more attractive candidate to lenders.

Regional Variations

Deposit requirements can vary across the UK. For instance, in London, the average deposit for first-time buyers was around £124,688 in 2024, reflecting the higher property prices in the capital.

Assistance for First-Time Buyers

Lifetime ISA (LISA): Allows individuals aged 18-39 to save up to £4,000 annually, with the government adding a 25% bonus.

First Homes Scheme: Offers new-build homes at a discount of 30% to 50% to local first-time buyers and key workers.

Shared Ownership: Enables buyers to purchase a share of a property and pay rent on the remaining portion, reducing the initial deposit required.

It’s advisable to consult with a mortgage advisor to explore these options and determine the best path to homeownership based on your financial situation.