Mortgage guide · worked examples in GBP
5%, 10% or 20% deposit: compare the borrowing
A deposit changes two numbers at once: the cash you need before completion and the amount you repay afterwards. Compare both before deciding on a target.
Start with the purchase price
For a £250,000 property, a 5% deposit is £12,500, a 10% deposit is £25,000 and a 20% deposit is £50,000. The corresponding loans are £237,500, £225,000 and £200,000. These are arithmetic scenarios, not a statement that each mortgage is available to you.
Hold the rate and term constant first
At an illustrative 5% annual interest rate over 25 years, those loans have monthly principal-and-interest payments of £1,388.40, £1,315.33 and £1,169.18 respectively. This isolates the effect of borrowing less. Actual quotes may also change the rate when the deposit changes.
Understand loan-to-value
Loan-to-value (LTV) is the loan divided by the property value, expressed as a percentage. In this example the three LTVs are 95%, 90% and 80%. The lender’s valuation may differ from the purchase price, so the LTV used for an offer may differ from this initial calculation.
Keep the rest of the budget visible
The deposit is only part of the upfront cash requirement. Allow separately for applicable purchase taxes, conveyancing, surveys, moving costs and lender fees. Keep ongoing costs in view too. A smaller mortgage payment alone does not establish that the purchase is affordable.
Use a local starting point
Our location pages turn official average prices into deposit comparisons. Pick a property type, then replace its average with the price of a home you are considering. The local calculators use pounds and let you compare deposits using your own price, rate and term.