New Build Deposit Explained: How Much Do You Need and When Do You Pay It?

The word deposit can mean several different things during a new build purchase, which is why buyers can become confused about how much money they actually need.

You may pay a reservation fee to secure the plot, provide a mortgage deposit from your own funds and then be asked for a contractual deposit when contracts are exchanged. Those amounts can overlap, but they are not automatically the same thing.

Understanding the difference before you reserve can prevent a cash-flow problem later in the transaction.

How much deposit do you need for a new build?

There is no single deposit percentage that applies to every new build mortgage. The amount depends on the lender, property type, your circumstances and the mortgage product available.

MoneyHelper says buyers usually need a mortgage deposit of at least 5% to 10% of the property price, although individual lenders and new-build products can require more. You can read its current guidance at MoneyHelper.

A larger deposit reduces the loan-to-value ratio and can give buyers access to a wider range of mortgage products or different pricing. You should obtain mortgage advice based on the exact property rather than assuming that a deposit accepted on an older home will automatically work for a new build.

Mortgage deposit vs exchange deposit

These two terms are often used as though they mean the same thing, but they describe different parts of the transaction.

Mortgage deposit

The mortgage deposit is the portion of the purchase price that is not being funded by your mortgage. If you buy a £300,000 home with a £270,000 mortgage, you are providing £30,000 from other funds, equivalent to 10% of the price.

Exchange deposit

The exchange deposit is the amount paid or accounted for under the purchase contract when contracts are exchanged. The contract sets out the amount and your conveyancer will explain how it is dealt with.

On a new build, exchange can happen only a few weeks after reservation even though the property may not be finished for months. That makes it important to understand the cash required at exchange before paying the reservation fee.

Is the exchange deposit always 10%?

A 10% contractual deposit is common in property transactions, but buyers should not assume that every new build contract will require exactly the same amount in every circumstance.

If your available cash deposit is lower, your conveyancer can explain whether the contract permits a different arrangement and whether the developer has agreed to it.

Do not rely on the sales adviser saying a lower deposit will be fine unless the legal paperwork and your conveyancer confirm the position.

What is the reservation fee?

The reservation fee is normally a smaller amount paid to reserve the chosen plot for a limited period while you progress the mortgage and legal work.

It is separate from the mortgage deposit, although the reservation agreement should explain how the fee is treated if the purchase completes or if you withdraw.

Read our new build reservation fee and agreement guide before paying it.

When do you pay the main deposit on a new build?

The timing depends on the contract, but the contractual deposit is commonly dealt with when contracts are exchanged.

This can be much earlier than buyers expect because new build developers often work to short exchange deadlines after reservation.

Our new build exchange of contracts guide explains how exchange fits into the wider process.

Why new build deposits can feel more complicated

With an existing home, exchange and completion may be relatively close together. When buying off plan, you can exchange while the home is still under construction and then wait months for completion.

• Your mortgage offer must remain valid until completion.

• The developer's estimated completion date can move.

• You may have upgrade payments or option costs alongside the deposit.

• The exchange deposit can be tied up for a long period.

• Your personal circumstances may change before the home is ready.

If you are buying before the home is finished, read our off-plan new build checklist.

Can you buy a new build with a 5% deposit?

Some buyers can obtain mortgages with a 5% deposit, but availability depends on the lender, product and property.

New build houses and flats can be treated differently by some lenders, and maximum loan-to-value limits can change. A product being advertised at 95% loan-to-value does not mean it is automatically available for every newly built property.

Speak to a mortgage adviser or lender before reserving if your purchase depends on a high loan-to-value mortgage.

Do flats need a larger deposit than houses?

Some lenders apply different maximum loan-to-value limits to newly built flats and houses, but policies vary and can change.

Do not use a generic online percentage as proof that you can finance a particular apartment. Confirm the lender's current new-build policy for that property type.

What happens to your deposit if the developer is delayed?

A construction delay does not automatically mean your contract ends or your deposit is returned.

Your rights depend on the contract, including the completion mechanism and any long-stop provisions. If the build extends beyond the expected timetable, ask your conveyancer what the contract allows.

Our new build completion delays guide explains why mortgage expiry and long-stop dates matter.

Is a new build deposit protected?

The protection applying to money paid before completion depends on the transaction, warranty arrangements and consumer-code protections that apply.

For developers covered by the New Homes Quality Code, the Code includes requirements around protecting customers and deposits. Your reservation agreement and conveyancer should explain the arrangements relevant to your purchase.

Do not assume every payment made to a developer has identical protection. Ask how the reservation fee, exchange deposit and any optional-extras payments are treated.

Can a developer incentive be used as your deposit?

A developer may offer financial incentives, but that does not mean the incentive can simply replace the cash deposit required by your mortgage lender.

Lenders assess incentives because they can affect the effective transaction price and valuation. Disclose every incentive to your broker, lender and conveyancer.

Read our new build incentives guide before comparing contributions, upgrades and discounts.

What if your parents are helping with the deposit?

Gifted deposits are common, but the lender and conveyancer normally need information about where the money came from and whether it is genuinely a gift or must be repaid.

Tell your mortgage adviser and conveyancer early rather than transferring a large sum immediately before exchange and expecting it to be accepted without further checks.

Do you need money beyond the deposit?

Yes. Using every pound of savings as the deposit can leave you exposed to other purchase and moving costs.

• Reservation fee.

• Conveyancing costs.

• Mortgage fees where applicable.

• Property transaction tax such as SDLT, LTT or LBTT.

• Snagging inspection costs.

• Developer upgrades.

• Removal costs.

• Insurance.

• Furniture and appliances not included.

• A contingency for the first months of ownership.

If you are budgeting for property tax, read do you pay stamp duty on a new build?.

What happens if the valuation is lower than the purchase price?

The mortgage lender values the property for lending purposes. If the valuation is lower than the agreed purchase price, the lender may calculate the available mortgage using its valuation rather than the amount you agreed to pay.

That can increase the cash you need or require you to reconsider the purchase, negotiate or find a different mortgage solution.

Our new build premium guide explains why headline prices need context.

New build deposit example

Imagine a new build is priced at £350,000 and you plan to use a 10% mortgage deposit.

• Purchase price: £350,000.

• 10% buyer contribution: £35,000.

• Indicative mortgage requirement: £315,000 before fees and lender adjustments.

• Reservation fee: treated separately according to the reservation agreement.

• Exchange deposit: determined by the purchase contract and explained by your conveyancer.

The example shows why 'I have a 10% deposit' does not answer every cash-flow question. You still need to know what is due at reservation, exchange and completion.

Questions to ask before reserving

• How much is the reservation fee?

• How is the reservation fee treated if I complete?

• What exchange deposit does the contract require?

• When is the exchange deadline?

• Has my lender confirmed the required mortgage deposit for this exact property?

• Does the lender have different rules for a new build house or flat?

• How are developer incentives treated?

• What other payments are due before completion?

• What happens to money paid if the development is significantly delayed?

• What cash will I still need for tax, legal fees and moving costs?

The bottom line

A new build deposit is not one single payment. Buyers need to distinguish the reservation fee, the cash contribution supporting the mortgage and the contractual deposit dealt with at exchange.

Confirm your mortgage position before reserving, ask your conveyancer exactly what will be required at exchange and keep enough money aside for the other costs of buying and moving.

For the wider financing process, read our new build mortgage guide.