A £20,000 deposit can feel substantial until you put it against the asking price of a flat. Equally, waiting until you have 20% saved can keep a first purchase out of reach for years. The question behind the search, “how much deposit first time buyer”, has no single answer: you may be able to buy with 5%, but the right figure depends on the property, mortgage deal, monthly budget and the cash you need to keep aside.
For buyers in South East London, where values can vary sharply between roads and property types, the most useful starting point is not simply saving the biggest deposit possible. It is understanding what each deposit level changes.
How much deposit does a first time buyer need?
In many cases, the minimum deposit is 5% of the purchase price. On a £300,000 home, that is £15,000. A lender then provides the remaining 95% of the price, known as a 95% loan-to-value mortgage, or 95% LTV.
A 5% deposit is not automatically available to every buyer. Lenders will still assess your income, committed spending, credit history, employment position and the property itself. They also apply affordability tests to check whether you could continue to pay the mortgage if interest rates rose.
A larger deposit usually gives you more choice. At 10%, 15% or 20%, you are borrowing a smaller proportion of the property value. That often means a lower interest rate and lower monthly repayments, although the exact gap between deals changes over time.
There is a balance to strike. Putting every available pound into the deposit can leave you without a contingency fund just when you need one. Moving costs, repairs and the first few months of ownership have a habit of arriving together.
What different deposit levels look like
The figures below show the basic deposit required at common levels. They do not include legal fees, survey costs or other buying expenses.
| Purchase price | 5% deposit | 10% deposit | 15% deposit | 20% deposit | |—|—:|—:|—:|—:| | £250,000 | £12,500 | £25,000 | £37,500 | £50,000 | | £300,000 | £15,000 | £30,000 | £45,000 | £60,000 | | £350,000 | £17,500 | £35,000 | £52,500 | £70,000 | | £400,000 | £20,000 | £40,000 | £60,000 | £80,000 |
For a buyer considering a £350,000 two-bedroom flat in Woolwich, Plumstead or Abbey Wood, a 5% deposit is £17,500. That may make ownership possible sooner. But borrowing £332,500 means the monthly payment will be higher than if you borrowed £315,000 with a 10% deposit.
The difference should be assessed against your real monthly life, not a lender’s maximum figure alone. Think about service charges if you are buying a leasehold flat, commuting, childcare, utilities, insurance and the savings you want to retain after completion.
Why 10% is often a useful target
A 10% deposit is not a rule, but it is a practical milestone. It can open up a broader range of mortgage products than 5%, while remaining more achievable than a 20% target for many first-time buyers.
It may also make an offer look more reassuring to a seller. A buyer with a mortgage agreed in principle and a meaningful deposit is not guaranteed to be chosen, but their finances can appear less exposed if a valuation comes in below the agreed price.
That said, do not delay a sensible purchase solely because 10% sounds like the ideal number. If a 5% deposit mortgage is affordable, the property suits your plans and you have money left for fees and emergencies, it may be the better route for you.
Your deposit is not your full buying budget
One of the most common first-time buyer mistakes is treating the deposit target as the finish line. It is only one part of the cash needed to complete.
You will normally need to budget for a mortgage valuation, a survey, conveyancing fees, searches, mortgage arrangement fees where applicable, removals and buildings insurance from exchange or completion, depending on the property and lender. Leasehold purchases can also involve extra management-pack or notice fees.
Stamp Duty Land Tax may be another cost. In England, first-time buyer relief can mean no stamp duty on a lower-priced purchase, but the rules, thresholds and eligibility conditions can change. It is worth checking the current position based on your expected purchase price rather than relying on an old figure from a friend or social media post.
As a working estimate, keep a separate pot for costs and a small emergency reserve. The amount will vary, but using all your savings for the deposit and hoping nothing needs attention is rarely a comfortable way to start homeownership.
Deposit size affects more than the interest rate
Mortgage rates are usually grouped by LTV bands, such as 95%, 90%, 85%, 80% and 75%. Crossing into a lower LTV band can improve the rate available, but it is worth checking the numbers rather than assuming that saving a little longer always produces a dramatic benefit.
For example, if you are close to a 10% deposit, reaching it may reduce both your loan size and the interest rate. That can have a meaningful effect on monthly payments. If getting there would take another two years of very tight saving while rents rise, buying with 5% could still be reasonable.
Your mortgage term matters too. Extending the term can lower the initial monthly payment, but you may pay more interest overall. You may be able to overpay later, subject to your lender’s conditions, but do not build a plan around overpayments you may not realistically be able to make.
Gifts, schemes and other ways to build a deposit
A deposit does not have to come only from ordinary savings. Some buyers use a combination of a Lifetime ISA, family gifts and savings built over several years.
A Lifetime ISA can be particularly helpful if you qualify and use it within the scheme rules, because the government bonus adds to your contribution. However, there are restrictions on withdrawals and property price limits, so understand those before relying on it as the centre of your plan.
Family support can be a straightforward gifted deposit, but it must be declared to the lender and solicitor. The person giving the money will usually need to confirm it is a gift rather than a loan that must be repaid. Lenders need clarity because undisclosed repayments could affect affordability.
Some households consider a joint purchase or a guarantor-style arrangement. These can help in the right circumstances, but they also create shared legal and financial responsibilities. Get advice before treating either option as a simple shortcut.
Check your mortgage position before viewing seriously
Before arranging a run of viewings, speak with a mortgage adviser and obtain an agreement in principle. This is not a mortgage offer, and the lender will still carry out full checks later, but it gives you a clearer price range and makes you better prepared to offer.
Be honest about all regular commitments. Credit cards, car finance, student loans, childcare and overdrafts can affect what you can borrow. So can a leasehold service charge, which is especially relevant when comparing flats. A home that looks affordable on its asking price may stretch your budget once the full monthly cost is included.
Also avoid large unexplained movements of money before applying. Lenders will commonly ask where your deposit came from, and clear bank statements make the process easier. If you are receiving a gift, start gathering the paperwork early rather than waiting until a sale is agreed.
Do not overlook the valuation risk
Your deposit percentage is calculated against the lender’s valuation, not necessarily the price you have offered. If you agree to buy at £350,000 but the lender values the property at £340,000, a 95% mortgage might be based on £340,000. You may then need to increase your cash contribution, renegotiate the price or reconsider the purchase.
This is one reason a little headroom can be valuable. It also underlines why local pricing knowledge matters. Comparing genuinely similar nearby sales, condition and tenure can help you make an offer that is ambitious without being detached from the market.
Set a target that lets you buy confidently
For many buyers, the sensible target is 5% to 10% of the purchase price, plus enough for buying costs and a reserve after completion. A bigger deposit can improve the mortgage options, but it should not leave you financially exposed or force you into delaying a move that already works for your circumstances.
Start with the monthly payment you can comfortably sustain, then work backwards to the likely mortgage amount, purchase price and deposit needed. When you are ready to understand how that applies to homes in SE18, SE28 or SE2, Hi Residential can help you view the local market with clear expectations and practical next steps.
