How much of a deposit will you need to get a mortgage on a £500,000 house?

by Aaron Strutt

Sep 01 2024

Mortgage lenders are doing more to make it easier for borrowers to purchase properties and get on the property ladder. If you wanted to buy a £500,000 house, the minimum deposit you would need is 5%. 

The amount of deposit you'll need for a mortgage on a £500,000 house depends on the loan-to-value (LTV) ratio the lender offers and your financial situation. 

Most big banks and building societies have returned to the low-deposit mortgage market, and there is a wide range of fixed rates. 

Here's a typical breakdown of the deposit you would need:

1. 5% Deposit:
• Some lenders offer mortgages with a 95% LTV, which means you'd need to provide a 5% deposit.
• Deposit Amount: £500,000 × 5% = £25,000
2. 10% Deposit:
• Many lenders prefer a 90% LTV, requiring a 10% deposit.
• Deposit Amount: £500,000 × 10% = £50,000
3. 15% Deposit:
• With an 85% LTV mortgage, you'd need a 15% deposit.
• Deposit Amount: £500,000 × 15% = £75,000
4. 20% Deposit:
• A more common and sometimes favourable option is an 80% LTV, requiring a 20% deposit.
• Deposit Amount: £500,000 × 20% = £100,000

How much deposit will you need to access the lowest mortgage rates?

A higher deposit generally results in better mortgage deals with lower interest rates. The most competitively priced mortgages tend to be for those with 35% or 40% deposits, while the most expensive rates are for those with 5% deposits.

Aaron Strutt, product director at Trinity Financial, says: "Lenders like NatWest for Intermediaries have five-year fixes priced around 3.75% for those with a 40% deposit, five-year fixes rise to start from 4.10% with a 20% deposit. The five per cent deposit fixes start from just over five per cent."

What are the lenders doing to help borrowers onto the property ladder? 

Some of the biggest banks and building societies offer first-time buyers and next-time buyers more generous income multiples so more buyers can get the mortgage they need.

Halifax for Intermediaries has recently launched a 'First Time Buyer Boost Mortgage' where the bank will lend up to 5.5 times the salary. This is more than many of the other mortgage lenders. To qualify, at least one person applying must be a first-time buyer. They must have a deposit of 10% or more to put down, and the total household income of everyone applying must be a minimum of £50,000. 

Halifax says it will boost the amount it can lend you by up to 22%. For example, If you have a total household income of £50,000 and a 10% deposit, the most you could borrow is £224,500. With the First Time Buyer Boost mortgage, you could borrow up to £275,000.

Call Trinity Financial on 020 7016 0790 to secure a mortgage or book a consultation

The information contained within was correct at the time of publication but is subject to change.

Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage