Mortgage Advice in Cardiff

How much deposit you need to buy a property depends on your personal situation and what it is exactly what you are looking to do. Here we take a look at how much you might need based on your own circumstances.

Why do I need a deposit anyway?

In previous years, 100% mortgages were readily available and before they were taken away, Northern Rock was offering 125% loan to value mortgages. What this meant is that if you were buying a property valued at £100,000 they would lend you up to £125,000.

Lenders require you to put down a deposit simply to reduce their risk of lending. If they lend you 100% of the purchase price then you happen to accrue any debts leading to property repossession, then they could be at a financial loss, especially if the house prices dip and they can’t make their money back.

You will also find that some say if you haven’t invested some of yours or your family’s money into your home, then you might find it a bit too easy to “walk away” should the going get tough and you were finding it difficult to meet your monthly payments. If you are not in a position to save up at least 5% of the purchase price yourself, then it could be argued that you’re not quite ready to take that first step onto the property ladder.

Is a 5% deposit enough?

At the moment, yes 5% is enough in many circumstances. Not all Lenders will accept only a 5% deposit though so your options are more limited and normally you will need a reasonable credit score to qualify. There are lenders out there that would consider you for a 95% mortgage with an average credit score but the interest rates are usually higher in those cases.

My credit history is poor – how much do I need to put down?

A majority of the specialist lenders want you to put down at least 15% deposit if you have a history of poor credit once again as above this is simply to reduce their risk in case a repossession becomes necessary. It is much more difficult to obtain this type of mortgage than it was in the mid-2000s but it’s not completely impossible to find one.

What about Buy to Let?

You’ve always needed to put down a much larger deposit for Buy to Let Mortgages and most lenders at the moment are looking for at least 25%.

Can I take out a loan for the deposit?

This could be possible but the vast majority of lenders won’t allow this as it would more or less still be 100% lending.

Can someone gift me a deposit?

Yes, this happens all the time. Usually, it’s “bank of Mum and Dad” gifting or other family members but lenders have been known to accept family friends for gifting the money, so long as they can evidence the funds, prove who they are and confirm they are not expecting repayment of the gift as some kind of loan.

Please remember that the above information is for reference purposes only and is not to be viewed as personal financial or mortgage advice.

Date Last Edited: February 10, 2025