What is a house deposit & why is it needed for a mortgage?

As houses are often too expensive to buy outright, a bank will offer a mortgage to cover the cost of the property, with monthly repayments that include both the loan and interest. In the UK, a deposit is required to secure a mortgage from the bank. You also have the option to buy a house with cash and therefore skip the process of applying for a mortgage. 

While the mortgage is an agreement between you and the bank, a house deposit is an agreement between you and the home seller. This provides assurance to both parties, protecting them from scams or financial loss if the home sale fails.   

How much is a house deposit?

The deposit rate for a house is generally uncapped, with a minimum of 5% of the property price. In the UK, the national average deposit stands around 20%. The larger the deposit you put down, the more likely you are to receive a larger mortgage offer, allowing you to afford a more expensive house or benefit from lower monthly repayments.

What's the minimum deposit for a house?

The minimum deposit for a mortgage in the UK is 5%. However, smaller deposits may lead to higher interest rates, fewer mortgage options, and potential rejection if applying for a larger loan. Meanwhile, larger deposits (over 25%) can unlock better mortgage deals.  The minimum deposit for a Bloor home is also 5%, through the Deposit Unlock scheme. 

Consider speaking to an Independent Financial Advisor (IFA) to determine which type of deposit suits you best. Once decided, you can transfer the funds to your solicitor, who will handle the financial and legal aspects of your home purchase. If you’re curious about what a home-buying solicitor do, learn more about it in our solicitor’s guide.  

Tips on how to save for a house deposit

Saving for a house deposit is like saving for other large purchases, like a car or renovation projects so it’s essential to get personalised advice when buying a home. If you’re interested in a Bloor home, we offer our Mortgage Subsidy scheme which allows you to lower your monthly repayments. Don’t hesitate to book an appointment with us today to find out more. 

Alternatively, discover schemes that are available to help you save on your deposit and spend more on your dream home:

Lifetime Individual Savings Account (LISA)

First-time buyers can use a Lifetime ISA to save for their first home. You can deposit up to £4,000 per year, and the government will supplement your deposit with a contribution (this will be 25% of what you’ve put towards your deposit each year.) 

For example, if you save £4,000, you'll receive £1,000 from the government. However, you’ll incur a 25% penalty if you withdraw funds for anything other than buying your first home or retirement. You can no longer apply for the Help to Buy ISA scheme, except in Wales, until the end of March 2025. 

First Homes Scheme

If you’re looking to buy your first home, you could potentially secure a discount of 30% to 50% off the property’s market value through the First Homes discount scheme. Bloor Homes also helps first-time buyers with our First Time Buyer package, which includes benefits such as mortgage payment assistance, a deposit boost and other perks. 

Ready to place your deposit for a house mortgage?

Paying your house deposit is the first step towards securing a mortgage and homeownership. Whether it's your first property or you're moving to a new one, once the deposit is paid, you're on the way to completing your purchase. To learn more about the next steps after securing your mortgage, read our buying guide.