Compare Deposit Options
Enter your property details and compare different deposit amounts to see how they affect your mortgage payments, LTV ratios, and total costs.
Compare Different Deposit Amounts & LTV Ratios
Compare how different deposit amounts affect your UK mortgage payments, LTV ratios, and total costs with our professional deposit comparison calculator. Our calculator shows you exactly how increasing your deposit reduces monthly payments, improves interest rates, and saves money over the mortgage term. Whether you're deciding between deposit amounts, exploring the impact of gifted deposits, or planning your home purchase strategy, get instant comparisons that help you understand deposit benefits. Use alongside our affordability calculator to see borrowing capacity and our repayment calculator to explore payment scenarios with different deposit levels.
Enter your property details and compare different deposit amounts to see how they affect your mortgage payments, LTV ratios, and total costs.
Understanding how your deposit affects your mortgage is crucial for making informed financial decisions. This comprehensive guide explains everything you need to know about deposit amounts, LTV ratios, and their impact on your mortgage costs.
Your deposit amount directly affects your mortgage costs, interest rates, and monthly payments. Here's a detailed comparison of common deposit levels and their impact on a £300,000 property purchase:
*Based on 25-year repayment mortgage. Rates are illustrative and vary by lender and individual circumstances.
Key Insight: Increasing your deposit from 5% to 20% on a £300,000 property saves you £481/month and £97,860 in total interest over 25 years. That's the equivalent of buying a new car every 5 years!
Loan-to-Value (LTV) ratio is the percentage of the property value you're borrowing. Lower LTV ratios (larger deposits) unlock significantly better interest rates because lenders view you as lower risk. Here's how LTV affects your rates in 2025:
Highest rates, limited lender choice, may require mortgage insurance
Better rates, more lender options, standard mortgage products
Competitive rates, wide lender choice, better terms
Best rates, maximum lender choice, premium products
Important: LTV thresholds (60%, 75%, 80%, 85%, 90%, 95%) are where rates change significantly. Even a 1% difference in LTV can move you to a better rate tier. For example, 89% LTV gets 90% LTV rates, but 90.1% LTV gets 95% LTV rates.
Building your deposit is often the biggest challenge for homebuyers. Here are the most common sources and strategies for accumulating your deposit in 2025:
Save up to £4,000/year and get a 25% government bonus (£1,000/year). Perfect for first-time buyers under 40.
Family members can gift money for your deposit. Most lenders accept gifts from immediate family with a gifted deposit letter.
Buy 25-75% of a property with a smaller deposit (5-10% of your share), then pay rent on the remaining share.
Set up automatic transfers to a high-interest savings account. Even small amounts add up over time.
If you're moving up the property ladder, use equity from your current property as a deposit for your next home.
Some employers offer deposit assistance schemes, salary sacrifice programs, or low-interest loans for homebuyers.
Practical tips to build your deposit faster and get the best mortgage rates
Max out your £4,000 LISA contribution for the 25% bonus, then save additional funds in a high-interest savings account. This dual approach maximizes both government bonuses and interest earnings.
Cut unnecessary subscriptions, negotiate bills, and reduce discretionary spending. Redirect these savings to your deposit fund. Even £200/month saved = £12,000 over 5 years.
Aim for key LTV thresholds (90%, 85%, 80%, 75%) where rates drop significantly. Sometimes saving an extra £5,000-£10,000 can unlock rates 0.3-0.5% lower, saving thousands over the mortgage term.
Buying with a partner, friend, or family member doubles your deposit-saving power. Two people saving £300/month each = £36,000 deposit in 5 years vs £18,000 solo.
Ask family members if they can help with a gifted deposit. Even £5,000-£10,000 can move you to a better LTV tier. Ensure proper documentation with a gifted deposit letter.
If you're close to a better LTV threshold, consider delaying your purchase by 6-12 months to save more. The rate improvement often outweighs the cost of renting for a bit longer.
Direct bonuses, tax refunds, inheritance, or other windfalls straight to your deposit fund. These unexpected boosts can significantly accelerate your timeline.
Don't use ALL your savings for a deposit. Keep 3-6 months of expenses as an emergency fund. This prevents financial stress and ensures you can handle unexpected costs after moving.
Common questions about deposit comparisons and mortgage deposits
Most UK lenders require a minimum deposit of 5-10% of the property value, though larger deposits (15-20%+) typically secure better interest rates and more favourable terms. First-time buyers may access schemes requiring smaller deposits, whilst buy-to-let mortgages usually need 20-25% minimum.
A larger deposit reduces your loan-to-value (LTV) ratio, which typically qualifies you for better interest rates and lower monthly payments. It also reduces the total amount borrowed, further decreasing monthly payments and total interest paid over the mortgage term.
Whilst larger deposits offer benefits, maintain an emergency fund covering 3-6 months of expenses. Consider additional costs like stamp duty, legal fees, surveys, and moving expenses. Balance deposit size against maintaining financial flexibility and other investment opportunities.
The optimal deposit is typically 15-20% of the property value. This balance provides access to competitive interest rates (usually 0.5-0.8% lower than 5-10% deposits) whilst maintaining financial flexibility for other expenses. A 15% deposit unlocks the 85% LTV tier with significantly better rates than 90% LTV, whilst a 20% deposit accesses the premium 80% LTV tier with the best rates and widest lender choice.
On a £300,000 property, increasing your deposit from 5% (£15,000) to 10% (£30,000) typically saves £150-£200/month and £45,000-£60,000 in total interest over 25 years. The 10% deposit unlocks 90% LTV rates (typically 0.5-0.7% lower than 95% LTV), provides more lender options, and eliminates mortgage insurance requirements that some 95% LTV mortgages require.
Yes, most UK lenders accept gifted deposits from immediate family members (parents, grandparents, siblings). You'll need a gifted deposit letter confirming: the amount gifted, that it's a gift (not a loan), the donor has no claim on the property, and the donor's relationship to you. The donor may also need to provide proof of funds (bank statements, savings account statements) to satisfy anti-money laundering requirements.
LTV (Loan-to-Value) thresholds are specific percentages where mortgage rates change significantly: 60%, 75%, 80%, 85%, 90%, and 95%. Even a 1% difference in LTV can move you to a different rate tier. For example, 89% LTV gets 90% LTV rates (typically 4.5-5.2%), but 90.1% LTV gets 95% LTV rates (typically 5.0-5.8%). This is why targeting these thresholds is crucial - sometimes saving an extra £5,000-£10,000 can unlock rates 0.3-0.5% lower, saving thousands over the mortgage term.
The average first-time buyer in the UK takes 5-7 years to save a deposit, though this varies significantly by region and income. For a £300,000 property requiring a 10% deposit (£30,000), saving £500/month takes 5 years. Using a Lifetime ISA accelerates this: saving £333/month (£4,000/year) for 5 years = £20,000 + £5,000 government bonus = £25,000. Combining LISA with additional savings can reduce the timeline to 3-4 years.
This depends on your circumstances. If you're close to a better LTV threshold (e.g., 89% vs 85%), saving for 6-12 months to reach it often makes financial sense - the rate improvement can save £50-£100/month for the entire mortgage term. However, if property prices are rising rapidly (>5%/year) or you're paying high rent, buying sooner with a smaller deposit may be better. Use our calculator to compare scenarios: calculate monthly payments at different deposit levels, then factor in your current rent and potential property price increases.
Budget for: Stamp Duty (£0-£425,000 for first-time buyers, then 5% on amount above), Solicitor/Conveyancing fees (£500-£1,500), Property survey (£300-£1,000 for HomeBuyer Report, £600-£1,500 for Building Survey), Mortgage arrangement fee (£0-£2,000), Valuation fee (£150-£500, sometimes free), Removal costs (£300-£1,000), and immediate home expenses (furniture, repairs, decorating). Total additional costs typically range from £3,000-£8,000 depending on property value and location.
Yes, you can combine multiple deposit sources: personal savings + Lifetime ISA bonus + gifted deposit + equity from property sale. For example: £15,000 personal savings + £5,000 LISA bonus + £10,000 gifted deposit = £30,000 total deposit (10% on a £300,000 property). Lenders will require documentation for each source: bank statements for savings, LISA statements, gifted deposit letter for gifts, and completion statement for equity from property sales.
Larger deposits significantly improve mortgage approval chances. A 20% deposit (80% LTV) gives you access to 95%+ of available mortgage products and lenders, whilst a 5% deposit (95% LTV) limits you to about 30-40% of products. Larger deposits also help if you have: slightly lower credit scores (a 20% deposit can offset a fair credit score), irregular income (self-employed, contract workers), or higher debt-to-income ratios. Lenders view larger deposits as lower risk, making them more willing to approve applications with minor imperfections.
A 5% deposit is acceptable for many first-time buyers, though it comes with trade-offs: higher interest rates (typically 5.0-5.8% vs 3.5-4.5% for 20% deposits), limited lender choice (fewer products available), potentially higher monthly payments (£200-£300 more/month on a £300,000 property vs 20% deposit), and some lenders may require mortgage insurance. However, government schemes can help: Lifetime ISA provides a 25% bonus to boost your deposit, Shared Ownership allows buying with just 5-10% of your share, and some lenders offer 95% LTV mortgages specifically for first-time buyers with competitive rates.