Finance glossary
Deposit
Also known as: Mortgage deposit
In simple terms
A mortgage deposit is the lump sum you put towards a property purchase from your own money. The rest comes from the mortgage. A bigger deposit usually means a cheaper mortgage.
On this page
What does deposit mean?
In a mortgage context, a deposit is the share of the purchase price you pay from your own savings, with the mortgage covering the balance. It is usually quoted as a percentage — a 10% deposit on a £200,000 home is £20,000.
The word “deposit” has a second, everyday sense in banking: money you pay into a savings or current account. Here we mean the property deposit, which is one-off money towards a purchase, not money held in an account.
How a deposit works
Your deposit and your mortgage together make up the purchase price. The larger your deposit, the smaller the loan relative to the value — a lower loan to value — which tends to unlock lower interest rates and a wider choice of deals.
Most lenders expect at least 5% to 10%, though a bigger deposit generally means better terms. You will also need separate money for costs such as stamp duty, legal fees and a survey, which the deposit does not cover.
How could this affect me?
Saving a larger deposit can meaningfully cut your monthly payments and total interest by moving you into a better LTV band. It also gives a cushion against falling prices, reducing the risk of negative equity.
A small deposit is not necessarily wrong — it can be the difference between buying now and waiting years — but it usually costs more in interest, so weigh buying sooner against paying a lower rate later.
Things to watch out for
- A bigger deposit crosses into cheaper LTV bands — a small extra saving can pay off.
- The deposit is separate from buying costs like stamp duty, legal fees and surveys — budget for those too.
- Gifted deposits usually need a letter confirming the money is a gift, not a loan.
- A very small deposit leaves little protection if property prices fall.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- MoneyHelper, How much deposit do you need for a mortgage? (opens in a new tab). Accessed 22 Aug 2026.
- GOV.UK, Help to buy a home schemes (opens in a new tab). Accessed 22 Aug 2026.