How Much Deposit Do You Really Need to Buy Your First Home?

The Minimum Deposit Requirement

In Northern Ireland and across the UK, the minimum deposit you’ll typically need is 5% of the property’s value. So, if you’re eyeing up a home worth £200,000, you’ll need at least £10,000 saved up.

However, while 5% might be the minimum, it’s not always the best route to take if you can afford to put down a higher amount. A higher deposit often opens the door to better mortgage rates, reducing your monthly payments.

Why a Bigger Deposit Helps

Lenders assess risk when offering a mortgage. The more money you can put down upfront, the less risky you appear. This means:

• Lower Interest Rates – With a bigger deposit, lenders will often reward you with lower rates.
• Higher Chance of Approval – A larger deposit may increase your chances of being accepted for a mortgage, even if your credit isn’t perfect.
• Smaller Monthly Payments – The more you borrow, the higher your repayments. A bigger deposit means you borrow less.

Deposit Thresholds to Know

Mortgage rates often change based on the size of your deposit. Here are some typical thresholds to keep in mind:

• 5% Deposit – Highest rates, but accessible for many first-time buyers.
• 10% Deposit – Better rates become available.
• 15%-30% Deposit – Even more competitive deals.
• 40%+ Deposit – Access to the best rates on the market.

What If I Don’t Have 5%?

If saving a 5% deposit feels out of reach, don’t panic. There are options:

• Co-Ownership Schemes – In Northern Ireland, this allows you to purchase part of a property and rent the rest, reducing the deposit required. However, if it’s at all possible for you to save the 5% deposit by just waiting a little longer, we would normally advise this instead of Co-Ownership.
• Family Gifted Deposits – Family members can gift you part (or all) of your deposit.
• Deposit Loans – Only one lender in Northern Ireland will allow personal loans to be used as a deposit, but this must be factored into affordability checks. Do not apply for any personal loans for this purpose without speaking to your broker first. You must also be honest with the personal loan provider to disclose to them the purpose of the loan you are taking out. Many personal loan providers will not allow you to take out a personal loan to use as a deposit on a home.

First-Time Buyer Perks

First-time buyers also benefit from Stamp Duty exemptions on properties up to certain thresholds, please refer to the .gov website for live figures. This can save you thousands, leaving more money in your pocket for your deposit or moving costs.

How to Save for Your Deposit

• Set a Savings Goal – Calculate your target deposit and set monthly savings goals. Savings accounts that round up your daily spending are a great way to build up extra funds for fees such as our fee, surveys, valuation fees etc.
• Open a LISA (Lifetime ISA) – You can get a 25% government bonus on savings up to £4,000 per year. This account does need to be open for at least 12 months before it can be used though.
• Cut Back on Non-Essentials – Redirect spending from luxuries to your savings. This can be difficult and of course depends on what you spend money on already. Think of non-essentials as anything from Holidays and new cars (£1,000s) to take-aways (£100s). Be honest with yourself and your spending, what can you cut back on or do without temporarily?

"While 5% is the magic number to get your foot on the property ladder, aiming for 10% or more can significantly improve your options and reduce costs over time. If you’re unsure what deposit you need, we’re here to guide you through the process. At Campbell Financial, we specialise in helping first-time buyers navigate the mortgage maze. Let us help you make your dream home a reality."

Sheena Campbell