How Much Deposit Do I Need to Buy a House in Leeds?

Quick Links

How much deposit will I need to save?

Why do I need a deposit anyway? 

Will the government pay the deposit for me? 

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

What about buy to let?

Can I take out a loan for the deposit? 

Can someone gift me a deposit? 

Are there any circumstances at all where I don't need a deposit? 

How much deposit will I need to save?

The minimum deposit amount that will be required for a deposit on a property is 5% of its value. Depending on a variety of factors, such as credit history, house type, and location, it may exceed this amount.

It can also depend on what you want to achieve. Maybe you’re buying your first house? Perhaps you are an existing homeowner looking to take on or convert your home into a buy to let. You might even be looking to use a government scheme as a means to get onto the property ladder.

Everyone has a different situation, so it is important to know in advance the amount of deposit you may need for what you want.

Why do I need a deposit anyway? 

Pre-credit crunch, mortgage lenders were handing out mortgages to people who could not even afford one, some even without a deposit. As you may know, the mortgage market crashed in 2008 and was not back to prominence until 2013.

It is for this reason a mortgage lender will now absolutely require a deposit from a home buyer, to provide some level of security, proving their borrower is reliable and can afford the repayments.

The latter is also why some applicants may find that their minimum deposit requirement is much higher because of poor credit and a potential history of unreliability. You may still be able to get a mortgage in this case, but it will certainly prove more complex and require a much higher deposit.

Assume that you have a good credit history, and your credit score is a high number, you are highly likely to have access to a 95% mortgage with only a 5% deposit. If your credit rating is not the best, you may expect a 10% – 15% minimum, or higher.

Will the government pay the deposit for me? 

While the government will not “give” the funds for your mortgage deposit, they may be able to help you put down the deposit or one of the various other mortgage schemes that could be available to you.

You can access different schemes. From the Shared Ownership Scheme, Armed Forces Buy Help, Lifetime ISA, and more, one of these government schemes could be the key to finding the success of a mortgage in Leeds.

A different scheme that could prove useful is the Right to Buy Scheme. This allows tenants to possibly purchase their rental property from the landlord (typically council or housing association), at a discounted price. Because of the equity in the property, you usually do not need to put down a deposit.

I have 5% deposit, is that enough?

A 5% deposit with a good credit score may be enough for home buyers to make standard purchases. However, mortgage lenders with the “best” deals for you may have higher minimum requirements, so it may be worth saving more than this.

Also, putting down a higher deposit will open you up too much better deals anyway, allowing you to choose a shorter term or reduce the cost of your monthly mortgage payments.

However, it is important to note that you still need to prove that you can afford a mortgage. You could have saved at least a 5% deposit, even higher, but if your income shows that you cannot meet monthly mortgage payments, you can still be rejected.

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

As mentioned above, if you have a bad credit history, you can use the minimum deposit requirement for about 10%-15%, potentially even higher.

In addition to this, you may also only have access to specialist mortgage products. It is here where we recommend taking out specialist mortgage advice in Leeds. This allows you to talk to a mortgage advisor in Leeds who can recommend the most suitable course of action.

What about buy to let?

You will require a slightly higher deposit if you are purchasing a buy to let in Leeds. It was always like this; it is usually anywhere between 20%-40%. As a mortgage broker in Leeds, we tend to find most high street lenders are asking for a minimum of at least 25%.

There are a few factors that can help you get a mortgage purchase. An example of this is that if you have already built a purchase to allow the portfolio, lenders may be more likely to lend to you.

Can I take out a loan for the deposit? 

In some cases, you may be able to do this, though generally speaking it will not be acceptable. A mortgage lender will very rarely accept a deposit funded by a loan because you will be paying back 100% of your mortgage. For more information, we recommend that you talk to a specialist mortgage advisor in Leeds.

A mortgage broker in Leeds like us is available 7 days a week, so if you have any questions, contact us, and book your free mortgage appointment to speak to an expert mortgage advisor in Leeds today.

Can someone gift me a deposit? 

Mortgage lenders always provide an incentive for gifted deposits as they are a wonderful way for first time buyers in Leeds to find their place on the property ladder. Gifted deposits are, as the name suggests, a deposit that is given to the applicant by a family member or friend.

You can use this gift if you can prove where the original funds came from. The person who has given you the deposit will also have to confirm in writing that it is not a loan, it is purely a gift.

Are there any circumstances at all where I don’t need a deposit? 

There are only a handful of different situations where you won’t need a deposit for a mortgage. Such as if you were buying as a sitting tenant at a discount from the open market value, buying from family member, or as mentioned above, with a Right to Buy mortgage. 

Date Last Edited: February 19, 2024