Most first time buyers in Leicester need a minimum of 5% of the purchase price. A 10% deposit opens a noticeably better band of rates, and the monthly difference between the two is usually larger than people expect. Leicester's advantage is that 5% here is a smaller cash sum than in most English cities.
The 5% versus 10% question
Lenders price mortgages in bands based on loan to value — how much you are borrowing against what the property is worth.
At 95% loan to value, you are borrowing as much as most lenders will allow, and you pay for that. At 90%, the rate improves. There are further improvements at 85% and 80%, though the jump from 95% to 90% is generally the most significant one a first time buyer will encounter.
This matters more than the deposit figure itself. If you are sitting at 7% or 8% and saving steadily, waiting a few months to reach 10% can reduce your monthly payment by more than the extra saving costs you. We run that comparison for clients regularly, and it frequently changes the plan.
The reverse also applies. If prices in the area you are buying are moving upward faster than you can save, waiting can cost you. There is no universal answer — it depends on your saving rate and where you are buying.
What else you need beyond the deposit
The deposit is not the whole cost, and this catches people out.
- Solicitor and conveyancing fees, plus searches and Land Registry fees
- Survey — a basic valuation may be free with the mortgage, but a homebuyer's survey on a Victorian terrace is money well spent
- Stamp duty — first time buyer relief may mean you pay nothing, depending on the purchase price and the thresholds applying at the time. Check the current rules on gov.uk, as thresholds change
- Moving costs, and whatever the property needs immediately
Lenders will also want to see the deposit is genuinely yours and has been in your account for a reasonable period, so avoid moving money between accounts in the weeks before applying.
Gifted deposits
Help from family is common and entirely normal. Every lender we work with accepts gifted deposits, but they all want the same thing: a signed letter from the person giving the money confirming it is a gift, not a loan, and that they retain no interest in the property.
If the money is genuinely a loan, say so. A lender that discovers an undeclared loan at underwriting will decline the case, and the repayments would have affected affordability anyway.
Gifts from outside the immediate family get closer scrutiny. Parents and grandparents are the most straightforward source. Help from an aunt, a friend or a more distant relative is still acceptable to most lenders, but expect more questions about the relationship and the source of the funds, and start the paperwork earlier. Some lenders want evidence of where the money originally came from, not just a signed gift letter, so raise it with your broker as soon as the gift is on the table.
Some lenders also accept arrangements where a family member's savings are held as security instead of being handed over, and released back after a set period. These are useful where parents want to help without permanently parting with the money.
Where the deposit stretches furthest in Leicester
Leicester's housing stock varies considerably by area, and so does what a given deposit buys.
Victorian terraces in Highfields, parts of Belgrave and the West End sit at the more affordable end. The 1930s and post-war semis in Evington, Braunstone, Birstall and Wigston are the mainstream first time buyer market. New builds around Enderby, Glen Parva and New Lubbesthorpe often come with incentives that can help with costs, though the mortgage rules for new builds are more restrictive.
City centre apartments in LE1 can look like good value on price alone, but flats are harder to finance — lenders look at building height, cladding and whether there is a commercial unit below.
A realistic sequence
- Work out what you can save monthly and what you already have
- Get a rough borrowing figure from a broker — this takes one conversation
- Add the two together to get your realistic purchase price
- Then start looking, not before
Looking at properties before you know your numbers is how people end up disappointed.
Talk to someone local
We are a whole-of-market broker based in Enderby, ten minutes from the city centre. The initial consultation is free and we will tell you honestly whether to buy now or keep saving.
Call 0116 277 7536 or read more about first time buyer mortgages in Leicester.
More guides: first time buyer guides for Leicester.
