How much deposit you really need

The twenty percent figure has stuck around because it's the point at which Lenders Mortgage Insurance stops applying. It's a real threshold with a real benefit — but treating it as the entry requirement keeps people renting for years longer than they need to.

What the different deposit levels mean

• 20% or more — no mortgage insurance, the widest choice of lenders, usually the sharpest rates.
• 10–20% — mortgage insurance applies, but the premium is moderate and can usually be added to the loan.
• 5–10% — mortgage insurance is expensive at this level, unless a government guarantee removes it entirely.
• Under 5% — generally only possible with a guarantor or the Help to Buy shared equity scheme.

Lenders Mortgage Insurance, explained

LMI is insurance you pay for that protects the lender, not you. If you default and the property sells for less than you owe, the insurer covers the lender's shortfall — and can then pursue you for it. It's widely resented, and it is also the mechanism that lets people buy years earlier than they otherwise could.

Genuine savings

Many lenders want to see that at least part of your deposit has been saved by you over time — usually five percent of the purchase price held for three months or more. A gift from family is fine, but if the whole deposit landed in your account last week, some lenders will want more explanation than others. If your deposit is largely gifted, say so early; it changes which lenders make sense.