First Time Buyer, minimum deposit?

Douglas Turnbull, Mortgage Adviser at ESPC, talks us through this topic.

This is something I get asked on a regular basis. The negative press surrounding mortgages and the economy in general has caused confusion for first time buyers.

"Do I need a quarter of the property value (25%) upfront?" No!

An explanation

Mortgage finance is allocated in different categories. These range from 60% "loan to value" (the lowest rates) to 90% "loan to value" (the more expensive).

"Loan to Value" is simply the amount the lender is fronting in relation to the value of your property - the higher the ratio, the higher the risk to the lender, hence the higher rate you pay.

In this regard, a 10% deposit is generally seen as the minimum amount required. When you hear of 20%, or even 25% or 40% deposits, this only refers to different mortgage rates that somebody can obtain, NOT what is a minimum requirement.

In monetary terms let me provide an example: let us assume a 1 bedroom flat in Edinburgh has a price of £100,000. You would have to find at least £10,000 to get started - leaving a mortgage requirement of £90,000. A £90,000 mortgage, on a Capital and Interest Repayment basis, would typically cost you around £552 per month*; now consider how much it is to rent a flat in Edinburgh.

Want to know more?

Please contact ESPC Mortgages on 0131 253 2920.

*assumed rate @ 5.5% over 25 years.


The initial consultation with an adviser is free and without obligation. Thereafter, ESPC Mortgages charges for mortgage advice are usually £350 (£295 for first-time buyers). YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED AGAINST IT.