How Much Deposit Do I Need to Buy a High-Quality Home


Buying a high-quality home is an exciting venture, but understanding how much deposit you need is crucial. In this guide, we'll explain the importance of a deposit, how much you should aim to save, and strategies for accumulating your deposit. We'll also explore if it's feasible to get a mortgage without one.

What Is a House Deposit?

A house deposit is the initial payment you make towards the purchase price of a property, it signifies your initial stake in the home. For high-end properties, this amount can be significant, most lenders require a minimum of 5% of the property's value. For instance, on a £1,000,000 home, a 5% deposit would be £50,000.

Strategies for Saving a Deposit

Saving for a deposit on a high-end home demands careful financial planning. Here are some strategies to help you accumulate your deposit:

  1. Define Your Savings Goal: Calculate the deposit amount you need and establish a timeline for saving.
  2. Detailed Budgeting: Monitor your income and expenses closely to identify where you can cut costs.
  3. Utilise High-Interest Savings Accounts: Choose savings accounts with competitive interest rates to maximise your returns.
  4. Invest Strategically: Consider low-risk investment options that may offer better returns than traditional savings accounts.

What Is Loan-to-Value (LTV)?

Loan-to-value (LTV) ratio is a key factor in mortgage lending, it is the percentage of the property’s value that you need to borrow. A lower LTV ratio generally results in better mortgage terms. For example, saving a 20% deposit results in an 80% LTV, which is more favourable to lenders.

Can You Obtain a Mortgage Without a Deposit?

While rare, it is possible to get a 100% mortgage, though these are limited and typically require a guarantor. A guarantor’s property is used as collateral, making lenders more comfortable offering a no-deposit mortgage.

Advantages of a Larger Deposit

More Attractive Mortgage Rates

With a larger deposit, you borrow less, which often leads to more favourable mortgage rates and lower monthly payments.

Higher Likelihood of Approval

Lenders are more inclined to approve your mortgage application if you have a substantial deposit, as it demonstrates financial stability.

Reduced Risk of Negative Equity

A significant deposit lowers the risk of negative equity, where your mortgage balance exceeds the property’s market value.

Boosting Your Deposit: Effective Methods

Releasing Equity

If you already own a property, you might consider equity release, this can free up funds to use as a deposit for your new high-quality home.


Selling a larger home to buy a smaller one can release significant funds, which can be used towards a deposit for a more suitable high-quality property.

Assistance from Family

Family support can be invaluable, whether through a financial gift, a loan, or acting as a guarantor for your mortgage.

Government Assistance Programmes

While many government schemes are designed for first-time buyers or lower-priced homes, some can still be beneficial:

Help-to-Buy Equity Loan

This programme offers an equity loan for new-build homes, covering up to 20% (or 40% in London) of the property value, interest-free for the first five years.

Lifetime ISA (LISA)

A LISA allows you to save up to £4,000 annually, with the government adding a 25% bonus. This can significantly enhance your deposit savings.

Frequently Asked Questions

When Is the Deposit Paid?

Typically, the deposit is paid at the exchange of contracts, which legally binds the transaction.

Who Manages the Deposit?

Your deposit is handled by your conveyancing solicitor, who transfers it to the seller’s solicitor upon exchange of contracts.

Is It Possible to Borrow the Deposit?

Borrowing a deposit is an option but can complicate your mortgage application, lenders will scrutinise your ability to repay both the loan and the mortgage, which can affect approval chances.

Does a Poor Credit History Impact Your Deposit?

Yes, poor credit can affect both your deposit requirements and mortgage approval, however, demonstrating recent financial stability and a steady income can help mitigate these issues.

For personalised advice on buying a high-quality home Chewton Rose, your specialist estate agent in premium properties. We are here to guide you through every step of the home-buying process.