You will hear "10% deposit" repeated as if it is the answer to all mortgage questions. It is not. It is a floor, not a target.
What loan-to-value (LTV) means for your rate
The deposit you put down determines your loan-to-value ratio. This matters because lenders price risk by LTV tier:
- 95% LTV (5% deposit): Available but expensive rates and limited lenders.
- 90% LTV (10% deposit): The practical entry point for most buyers.
- 85% LTV (15% deposit): Meaningfully better rates — worth extra saving if you are close.
- 80% LTV (20% deposit): Access to the most competitive deals.
- 75% LTV and below: The best rates in the market.
The rate difference between 90% and 85% LTV on a £200,000 mortgage is typically £30–£60/month — around £400–£700/year — for the same property.
What counts as a deposit
Savings, a gifted deposit from family, or equity from a previous sale. Personal loans and credit card cash advances do not count. Lenders conduct source-of-funds checks.
The Lifetime ISA
If you are a first-time buyer aged 18–39 buying under £450,000, save up to £4,000/year and the government adds a 25% bonus — up to £1,000/year. Know the £450,000 cap before committing.
What to aim for
Aim for 10% as your initial milestone, then model whether 15% is achievable within a year. An extra 3–6 months of saving to hit the next LTV tier is usually worth it.
Calculate your mortgage range with your current income and deposit →