Deposits Explained: How Much Do First-Time Buyers in Scotland Really Need?

★ Key Takeaways

• The minimum deposit for a mortgage in Scotland is 5% (95% LTV), though some lenders have property type restrictions
• A 10%+ deposit unlocks significantly better interest rates and more lender options
• The average first-time buyer deposit in Scotland in 2025 is £30,787
• Gifted deposits from family are accepted by most lenders with a signed gift letter
• Key LTV thresholds (90%, 85%, 75%) offer progressively better rates as your deposit increases

One of the biggest hurdles for first-time buyers in Scotland is saving enough for a deposit. But how much do you actually need? The answer depends on several factors – from the type of property you're buying to how competitive an interest rate you want to secure.

In this guide, we'll break down everything you need to know about mortgage deposits in Scotland – the minimum requirements, how your deposit size affects your mortgage rate, which lenders offer 95% mortgages, and practical strategies for building your deposit faster. Whether you're just starting to save or you're ready to buy, this guide will help you understand exactly what you need.

The minimum deposit most lenders require is 5% of the property's purchase price. This gives you a 95% Loan-to-Value (LTV) mortgage. For a £200,000 property, that's a deposit of just £10,000.

However, while 5% gets you on the ladder, 10% or more is recommended if you can manage it. Here's why:

• Better interest rates – Lenders see you as lower risk with more equity
• More lender choice – Not all lenders offer 95% LTV products
• Lower monthly payments – You're borrowing less overall
• Protection against negative equity – More buffer if house prices dip

The average first-time buyer deposit in Scotland in 2025 is £30,787 – roughly 15% of the average first-time buyer property price. This shows that many buyers are stretching beyond the minimum to secure better deals.

Mortgage rates are heavily influenced by your Loan-to-Value ratio. The more deposit you put down, the lower your LTV, and typically the better your interest rate. Here's how the key LTV thresholds typically affect rates:

Deposit and LTV Rate Impact

Even a small rate difference adds up significantly over a 25-30 year mortgage term. A 0.5% rate reduction on a £180,000 mortgage could save you over £15,000 in interest over the full term.

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If you only have a 5% deposit, you'll need a lender that offers 95% LTV mortgages. Here's the current landscape:

Lenders Offering 95% LTV

Important: If you're buying a flat in Scotland with a 5% deposit, your lender options are more limited. A mortgage broker can help you find the right lender for your situation.

Can't save the full deposit yourself? A gifted deposit from family is a common way first-time buyers get on the property ladder. Most lenders accept gifted deposits, but there are important requirements:

• Gift letter required – The donor must sign a letter confirming the money is a gift, not a loan, and they have no claim on the property
• Family members only – Most lenders only accept gifts from parents, grandparents, or siblings
• Source of funds – The donor may need to provide bank statements showing where the money came from

Some lenders require you to contribute at least some of your own savings (typically 5%), while others accept 100% gifted deposits. This is where understanding how much you can borrow alongside your deposit options becomes essential.

Anti-money laundering regulations mean lenders must verify where your deposit comes from. Be prepared to provide evidence for:

• Savings – Bank statements showing gradual accumulation over time
• Gifts – Gift letter plus donor's bank statements
• Inheritance – Probate documents or solicitor's letter
• Sale of assets – Evidence of the sale (car, investments, etc.)

Good news for Scottish first-time buyers: you pay 0% Land and Buildings Transaction Tax (LBTT) on the first £175,000 of your property purchase. This is more generous than the £145,000 threshold for other buyers.

For a £200,000 property, a first-time buyer would pay just £500 in LBTT, compared to £1,100 for a non-first-time buyer. This saving can help boost your deposit or cover other hidden buying costs.

For more help with affordability, explore the government help available to Scottish first-time buyers.

Saving for a deposit takes discipline, but these strategies can help you reach your goal faster:

• Use a Lifetime ISA – Get a 25% government bonus (up to £1,000/year) on savings up to £4,000 annually
• Automate your savings – Set up a standing order on payday so you save before you spend
• Reduce living costs – Consider living with family temporarily to accelerate savings
• Track every expense – Use budgeting apps to find areas where you can cut back
• Set a target date – Having a deadline creates focus and motivation

What is the minimum deposit for a first-time buyer in Scotland?

The minimum deposit is 5% of the property price, giving you a 95% LTV mortgage. However, not all lenders offer 95% mortgages on all property types – some won't lend at 95% on flats. A 10% deposit opens up more options and better rates.

Can I use a gifted deposit from my parents?

Yes, most lenders accept gifted deposits from immediate family members (parents, grandparents, siblings). You'll need a signed gift letter confirming the money is a gift with no expectation of repayment or claim on the property. Some lenders may also require proof of where the gift money came from.

Does a bigger deposit mean a lower interest rate?

Yes, generally. The lower your Loan-to-Value ratio, the better rates you'll be offered. Key thresholds are 90% LTV (10% deposit), 85% LTV (15% deposit), and 75% LTV (25% deposit). Each threshold typically unlocks better rate bands.

What happens if I can only afford a 5% deposit on a flat?

Your options are more limited but not impossible. Lenders like Halifax, Santander, Scottish Widows, Barclays, and Accord offer 95% LTV mortgages on flats. A mortgage broker can help you find the right lender and navigate any additional requirements.

Understanding how deposits work is a crucial first step toward homeownership in Scotland. Whether you're still saving, have family help available, or are ready to buy with a 5% deposit, the right advice makes all the difference.

At McGhie Mortgages, I help first-time buyers across Edinburgh, the Lothians, and all of Scotland find the right mortgage for their deposit size and circumstances. I'll search the whole market to find lenders who suit your situation – including those offering 95% LTV mortgages and those with flexible gifted deposit policies.

Ready to take the next step? Book a free, no-obligation consultation and let's work out the best path to your first home.