The deposit is usually the biggest upfront cost when buying a home. In London, where property prices are higher than in most UK markets, the amounts involved can be substantial. This guide explains how deposits work, what you might need at London price points, and how putting down more can affect your mortgage options. For an overview of our London mortgage services, see our London page.
How Much Deposit Do You Need?
Some lenders may accept a minimum deposit of 5% of the property’s purchase price, subject to criteria, affordability, and property type. For a home costing £400,000 in London, a 5% deposit would be £20,000. Product choice is usually more limited at 95% LTV than at higher deposit levels.
A deposit of 10% or more can provide access to a wider range of lenders, although availability varies. Pricing and choice often improve as your LTV reduces. A larger deposit reduces the amount borrowed and lowers the loan-to-value ratio used by lenders when assessing mortgage options.
Deposit Examples at London Price Points
The table below shows what different deposit percentages look like at London property prices. These figures are illustrative and shown for guidance.
| Property price | 5% (95% LTV) | 10% (90% LTV) | 15% (85% LTV) | 20% (80% LTV) |
| £300,000 | £15,000 | £30,000 | £45,000 | £60,000 |
| £400,000 | £20,000 | £40,000 | £60,000 | £80,000 |
| £450,000 | £22,500 | £45,000 | £67,500 | £90,000 |
| £500,000 | £25,000 | £50,000 | £75,000 | £100,000 |
| £600,000 | £30,000 | £60,000 | £90,000 | £120,000 |
| £750,000 | £37,500 | £75,000 | £112,500 | £150,000 |
| £850,000 | £42,500 | £85,000 | £127,500 | £170,000 |
| £1,000,000 | £50,000 | £100,000 | £150,000 | £200,000 |
Figures are illustrative. Actual prices vary by property type, condition, and location.
Why Your Deposit Size Matters
The size of your deposit directly affects three things.
Interest rate. Lenders price mortgages based on LTV bands. Pricing generally improves as LTV reduces, though the difference between bands varies over time. A broker can show you how lender bands apply at the time you apply.
Product choice. At 95% LTV, fewer lenders compete for your business. At 90% and below, the range of available products increases, giving you more flexibility on features like overpayment allowances, portability, and fixed-rate terms.
Monthly payments. A larger deposit means borrowing less, which reduces your monthly repayment. It also gives you a buffer if property values change — you are less likely to end up in negative equity.
Lenders price mortgages across a range of loan-to-value bands, with pricing often improving as deposit size increases. A broker can show you how these bands apply to your specific deposit and purchase price.
London: Deposit vs Affordability
In London, the deposit is often not the only — or even the main — constraint on buying. At London property prices, your borrowing capacity can be as limiting as your deposit. Mortgage lenders typically assess how much you can borrow based on your income rather than purely on the deposit you have available.
For many London buyers, borrowing capacity can become as important as deposit size because lenders assess affordability using a range of income and expenditure factors. A buyer with a sufficient deposit may still find that their borrowing capacity limits the price they can pay. Understanding both figures — how much you have saved and how much you can borrow — before you search is important. For more on how lenders assess borrowing, see how much you can borrow in London.
First-Time Buyers in London
First-time buyers in London face deposit requirements that are higher than in most other parts of the UK. Many London first-time buyer purchases exceed the £300,000 stamp duty nil-rate threshold, which means many will pay some SDLT on top of the deposit. First-time buyers pay no stamp duty on the first £300,000 and 5% on the portion to £500,000. Above £500,000, first-time buyer relief is lost entirely and standard rates apply.
Note: some comparison tools and online guides still show the old temporary stamp duty threshold of £425,000 for first-time buyers. This threshold ended on 31 March 2025. The current nil-rate threshold for eligible first-time buyers is £300,000, and has been since 1 April 2025 (source: GOV.UK). At a £450,000 first-time buyer purchase, SDLT would be £7,500 — a meaningful additional upfront cost to budget for. For worked examples at London price points, see our London stamp duty guide.
Ways to Build or Boost Your Deposit
Lifetime ISA
A Lifetime ISA allows you to save up to £4,000 each tax year towards your first home, with a 25% government bonus added on top. You can open one between the ages of 18 and 39, and the bonus is paid until you turn 50. The account must usually have been open for at least 12 months before it can be used towards a qualifying purchase.
The property price limit for a Lifetime ISA is £450,000. In London, this is an important restriction. Many first-time buyer properties in inner and mid-London exceed £450,000, which means the LISA cannot be used for those purchases. Any property costing more than £450,000 makes you ineligible to use the LISA for that purchase — and if you withdraw the funds for any other purpose, you face a 25% withdrawal penalty which effectively means losing the government bonus and a portion of your own savings. Buyers targeting London properties above £450,000 should check the LISA rules carefully on GOV.UK before adopting it as part of their savings strategy.
Family Support and Gifted Deposits
Given the deposit amounts required in London, family support is a common feature of first-time buyer purchases. Some lenders offer products or criteria that support family-assisted purchases, including gifted deposit arrangements where a parent or family member provides all or part of the deposit as a gift, and family support products where savings may be held as security. Availability and criteria vary by lender. A broker can help explain which options may be available for your circumstances.
Overseas funds are not uncommon as deposit sources in London. Lenders have different approaches to deposits from abroad, and documentation requirements vary. If any part of your deposit comes from overseas, it is worth discussing this with a broker early to avoid delays at the application stage. A signed gift letter will be required for any gifted element, regardless of source.
Shared Ownership
Shared Ownership lets you buy a share of a property (typically 25% to 75%) and pay rent on the remainder. This reduces the deposit you need, since you pay a percentage of the share you are purchasing. In London, shared ownership operates under a household income cap of £90,000, compared with £80,000 elsewhere in England (GOV.UK, Capital Funding Guide). Lenders specialising in shared ownership in London are a relatively narrow pool, and the interaction between mortgage, rent, and service charges requires careful affordability modelling. For more detail, see our shared ownership guide.
Regular Saving
For buyers who are further from a purchase, regular saving in a cash ISA or savings account builds a deposit progressively. At London price points, saving towards a 10% deposit on a £500,000 property requires £50,000 before other costs. This is a meaningful savings target that benefits from starting early and saving consistently.
Do Not Forget the Other Upfront Costs
Your deposit is not the only upfront cost. When budgeting for a purchase in London, you should also allow for the following.
Stamp Duty Land Tax. Depends on your circumstances and whether you are a first-time buyer, home mover, or additional property buyer. At London price points, this is often a significant figure. See our London stamp duty guide for worked examples.
Solicitor or conveyancer fees. These vary depending on the property and transaction complexity. Leasehold transactions — which make up the majority of London flat purchases — are often more expensive than freehold purchases due to additional enquiries around the lease, management pack, and service charge accounts. Obtain quotes from a few firms before instructing.
Survey. A homebuyer report or building survey cost depends on the property and level of survey required. For a London flat in a building with potential cladding or structural issues, a survey is particularly worthwhile.
Mortgage arrangement fee. Some mortgage products carry a product fee, which can be added to the loan or paid upfront.
Broker fee. If applicable, your broker will confirm this before you commit to proceeding.
Moving costs. Removals, utility connections, and any immediate work on the property.
What Counts as a Deposit and What Does Not
Lenders need to verify where your deposit has come from. This is a legal requirement under anti-money laundering regulations, and it applies to every purchase. Acceptable sources typically include personal savings held in a bank account, proceeds from the sale of another property, a gifted deposit from a family member (with a signed gift letter), and inheritance. Funds from investments or pensions may also be acceptable depending on the lender.
Lenders usually want to see deposit funds held in your account for a period before you apply. Large one-off credits — such as cash deposits, transfers from unfamiliar sources, or funds from overseas — will be queried and may need additional documentation. London has a significant international population, and overseas deposit funds are not uncommon. Lenders have different approaches to these, and a broker familiar with London buyers can guide you on what documentation is needed and which lenders are most straightforward for your circumstances.
Why We Wrote This Guide
Fitch & Fitch is an independent, whole-of-market mortgage broker with offices in Canary Wharf, Cambridge, and Colchester. We are an appointed representative of JLM Mortgage Network, authorised and regulated by the Financial Conduct Authority (FCA Registration Numbers 955014 and 300629). You can verify this on the FCA Register at register.fca.org.uk.
Fitch & Fitch has received recognition from independent industry bodies including the Mortgage Strategy Awards, Mortgage Introducer Awards, and Legal & General Mortgage Club Awards. These awards are judged independently and can be verified on the respective awards websites.
We wrote this guide because we believe an informed buyer makes better decisions. For further information about our London mortgage services, visit our London hub page.
Frequently Asked Questions
What is the minimum deposit to buy a house in London?
Some lenders accept a minimum deposit of 5% of the purchase price, subject to criteria, affordability, and property type. At 95% LTV the product range is often more limited than at lower loan-to-value levels. For a £400,000 London property, a 5% deposit is £20,000. However, the minimum deposit is only one part of the picture — your borrowing capacity also needs to support the loan required after the deposit is applied.
Is £100,000 enough for a house deposit in London?
£100,000 is a 20% deposit on a £500,000 property, a 15% deposit on a £667,000 property, or a 10% deposit on a £1,000,000 property. £100,000 represents a meaningful deposit for many London purchases, although suitability depends on the purchase price you are targeting and whether your income can support the mortgage on the remainder.
Can I buy a house in London with a £20,000 deposit?
£20,000 is a 5% deposit on a £400,000 property, which would mean a 95% LTV mortgage. In London, a £400,000 property is accessible in some outer boroughs and for certain property types. At 95% LTV the product range is more limited, and the borrowing required would need to be supported by your income. Buyers with a £20,000 deposit may often be considering higher loan-to-value products on outer London properties.
What is the average deposit for a house in London?
Average deposit figures for London vary considerably by source and buyer type. First-time buyer deposits are higher in London than in most other UK regions, reflecting higher purchase prices. The figure that matters is the one based on your own circumstances and intended purchase.
Can I use a Lifetime ISA to buy in London?
Yes, if the property costs £450,000 or less. Many London properties within the outer boroughs fall within this limit, but a significant number of first-time buyer purchases in mid and inner London exceed it, which means the LISA cannot be used for those purchases. Check the current rules on GOV.UK before assuming the scheme applies to your intended purchase.
Do I need a bigger deposit for a leasehold flat in London?
Not necessarily, but leasehold flats can face additional lender restrictions based on lease length, ground rent, and EWS1 cladding status. A flat with a short lease (under 80 years), a high ground rent, or an unresolved EWS1 requirement may require a larger deposit, or may only be accepted by a limited pool of lenders. A broker can check which lenders are suitable for the specific property. For more on leasehold considerations, see our London leasehold mortgage guide.
Do I need a bigger deposit for a buy-to-let in London?
Yes. Most buy-to-let lenders require a minimum deposit of 25%, and some require more for certain property types, including some new-build flats. For a full guide, see our London buy to let guide.
How much stamp duty do first-time buyers pay in London?
First-time buyers pay no stamp duty on the first £300,000 and 5% on the portion between £300,001 and £500,000. Above £500,000, first-time buyer relief is lost and standard rates apply to the full purchase price. Note that some websites still show the old £425,000 temporary threshold, which ended on 31 March 2025. The current threshold has been £300,000 since 1 April 2025. For worked examples, see our stamp duty guide.
Next Steps
A useful next step can be understanding how your deposit fits alongside borrowing capacity and likely upfront costs before beginning a property search.
For further information about our London mortgage services, visit our London hub page.
Related Guides
How Much Can I Borrow for a Mortgage in London?
First-Time Buyer Mortgages in London
Buy-to-Let Mortgages in London
The information above is for general guidance only and does not take account of your personal circumstances. Stamp duty figures are based on HMRC published rates effective 1 April 2025 (GOV.UK).