Comparison · Mortgages & Home Buying · 2026
5% vs 10% Mortgage Deposit UK 2026: Which Saves More Long Term?
The size of your deposit changes far more than how much cash you hand over on day one. It sets your loan-to-value band, which drives the interest rate, the monthly payment and the total interest you pay over the term. This guide compares a 5% deposit against a 10% deposit on a typical UK home, with a worked example using a GBP 250,000 purchase.
TL;DR -- 30-Second Summary
- • 5% deposit (95% LTV): buy sooner, keep more cash, but higher rate and bigger loan
- • 10% deposit (90% LTV): lower rate band, smaller loan, less total interest
- • Stamp duty is the same either way -- it is charged on price, not deposit
- • Rule of thumb: crossing into a lower LTV band is one of the best ways to cut cost
- • Trade-off: the rate saving from a bigger deposit versus rent and price rises while you save
Side-by-Side Comparison
| Feature | 5% Deposit (95% LTV) | 10% Deposit (90% LTV) |
|---|---|---|
| Cash needed (GBP 250,000 home) | GBP 12,500 | GBP 25,000 |
| Mortgage amount | GBP 237,500 | GBP 225,000 |
| Typical rate band | Higher (95% LTV) | Lower (90% LTV) |
| Time to save | Shorter -- buy sooner | Longer -- buy later |
| Equity buffer | Thin -- higher negative-equity risk | Larger -- more protection if prices dip |
| Product choice | Fewer deals available | Wider choice of deals |
| Stamp duty | Identical -- SDLT depends on the purchase price, not the deposit | |
Worked Example: A GBP 250,000 Home
Assume a GBP 250,000 home and a 25-year repayment term. With a 5% deposit of GBP 12,500 you borrow GBP 237,500 at 95% LTV. With a 10% deposit of GBP 25,000 you borrow GBP 225,000 at 90% LTV. Lenders usually price 90% LTV below 95% LTV, so assume an illustrative 5.0% rate at 95% LTV and 4.5% rate at 90% LTV.
| Measure | 5% deposit at 5.0% | 10% deposit at 4.5% |
|---|---|---|
| Loan amount | GBP 237,500 | GBP 225,000 |
| Approx. monthly payment | about GBP 1,388 | about GBP 1,251 |
| Approx. total interest (25 yrs) | about GBP 179,000 | about GBP 150,000 |
| Extra cash needed up front | - | GBP 12,500 more |
In this illustration the 10% deposit cuts the monthly payment by roughly GBP 137 and the total interest by around GBP 29,000 over 25 years, in exchange for GBP 12,500 more up front. These figures are estimates; rates change frequently and your actual deal depends on lender criteria, term and product fees. Use a mortgage calculator with live rates before deciding.
When a 5% Deposit Wins
A 5% deposit makes sense when getting on the ladder quickly matters more than shaving the rate. If you are paying high rent, expect house prices to keep rising, or have a stable income but limited savings, buying sooner with 95% LTV can be the better move overall. It also preserves cash for moving costs, furniture and an emergency fund, which reduces the risk of taking on expensive short-term credit after completion.
It can also suit buyers who expect their income to rise soon, since they may remortgage to a lower LTV band within a few years as the balance falls and the property value grows, capturing a better rate without having waited to save the larger deposit first.
When a 10% Deposit Wins
A 10% deposit wins when you can save the extra without prices running away from you, and you want the lowest sustainable monthly cost. Dropping from 95% to 90% LTV typically opens a wider range of cheaper products, lowers the monthly payment and reduces total interest substantially over the term, as the worked example shows.
It is also the safer choice if there is any chance you might need to move or remortgage during a soft market, because the larger equity buffer reduces the risk of being trapped by negative equity. For buyers who already have the cash, a 10% deposit is usually the stronger long-term financial position.