TL;DR When buying a property in the UK, you’ll encounter two separate deposits at different stages of the process.
Your mortgage deposit is the total sum you put towards the purchase price. Your exchange deposit is the amount paid to legally commit to the purchase at exchange of contracts, and it’s usually 10% of the property price.
The two figures are not always the same, and this catches many buyers off guard.
A mortgage deposit is the total sum you put towards the purchase price of a property. An exchange deposit is 10% of the purchase price, paid to the seller’s solicitor when contracts are exchanged. The two figures come from the same pot of money but are paid at different stages of the buying process, and the amounts are not always identical.
You’ve saved your deposit, got your mortgage agreed in principle, and your offer has been accepted.
Things are moving.
Then your solicitor asks you to transfer a deposit just before exchange of contracts, and you wonder why no one mentioned this before.
This confusion is more common than you might expect. According to Nationwide, first-time buyers made up almost 55% of all homes bought in 2024, and many are encountering the exchange deposit requirement for the first time.
Most buyers know they need a deposit to get a mortgage. Far fewer understand that there’s a second deposit involved when you exchange contracts, and the amount can be different to the one sitting in your savings account.
Getting this wrong at an important point in the process can cause real problems, so it’s worth understanding exactly what each deposit does and how they relate to one another.
By the end of this article, you’ll know what to expect, when to expect it, and what to do if the numbers don’t add up.
What Is a Mortgage Deposit and How Does It Affect Your Purchase?
Your mortgage deposit is the total amount of money you’re putting towards the purchase price of the property. It’s the difference between the property price and the mortgage you’re applying for.
How Your Deposit Affects Your Mortgage
The size of your deposit matters for several reasons.
The size of your mortgage. This is the most direct effect. If you’re buying a property for £500,000 and you have a £100,000 deposit, you need a £400,000 mortgage. Put in more deposit and the mortgage gets smaller.
Your monthly repayments. A smaller mortgage means lower monthly repayments, straightforward as that.
Your loan to value (LTV). LTV is your mortgage expressed as a percentage of the property price. A £400,000 mortgage on a £500,000 property is 80% LTV. Lenders use LTV bands to price their mortgage products, so the lower your LTV, the better the rates you’ll generally have access to.
The products available to you. Lenders set their interest rate products by LTV band. Drop from 90% to 85% LTV and you may find yourself with access to better rates. This is why it can sometimes be worth stretching your deposit to cross a threshold, though a good broker will help you work out whether that makes financial sense.
Where Does the Deposit Come From?
If you’re a first-time buyer, your deposit will usually come from your savings. The average first-time buyer deposit in the UK was £61,090 in 2024, equivalent to 20% of the average first-time buyer purchase price of £311,034.
Moving from a property you already own means your deposit will usually be made up of the equity in your current home, potentially topped up with savings.
In some cases, part of the deposit may come from a gift, usually from a close family member.
According to Nationwide data from 2024/25, over a third of first-time buyers received some form of help from friends or family to fund their deposit, whether as a gift, loan, or inheritance.
Lenders have specific rules around gifted deposits, so you’ll need to declare this upfront.
Read more: Guide to Deposits
What Is an Exchange Deposit When Buying a House?
To understand the exchange deposit, it helps to know the three stages of buying a property.
The Three Stages of a Property Purchase
Stage 1: Signing the contract. Both buyer and seller sign their respective contracts agreeing to the purchase at a specific price.
Stage 2: Exchange of contracts. The signed contracts are swapped between the solicitors acting for each side. Once this happens, the sale becomes legally binding. You are committed to buying. The seller is committed to selling. There’s no turning back without financial consequences.
Stage 3: Completion. On completion day, money changes hands and you get the keys. You become the legal owner of the property.
The exchange deposit is paid at Stage 2.
Under the Standard Conditions of Sale, which govern most residential property contracts in England and Wales, the required deposit at exchange is 10% of the purchase price. Your solicitor will request this from you before exchange takes place, and it’s then transferred to the seller’s solicitors as a commitment payment.
Why Does the Exchange Deposit Exist?
The exchange deposit is there to make the commitment real. Contracts become legally binding at exchange, but the 10% deposit adds financial weight to that commitment.
If you pull out after exchange, the seller can keep the deposit.
They may also be able to pursue you for additional losses depending on the contract terms. The deposit protects the seller from buyers who might otherwise walk away at the last minute without consequence.
How the Two Deposits Relate to Each Other
The mortgage deposit and the exchange deposit are not the same thing, even though the money ultimately comes from the same pot.
Here is how they relate to each other.
Your mortgage deposit is your total contribution to the purchase.
The exchange deposit is a portion of that total, paid out early to lock in the deal. On completion, the remaining balance of your deposit (along with the mortgage funds released by your lender) makes up the full purchase price.
Worked Examples
The clearest way to show this is with a pair of examples.
Example 1: 10% Deposit
| Purchase price | £500,000 |
| Mortgage deposit (10%) | £50,000 |
| Mortgage required | £450,000 |
| Loan to value | 90% |
| Exchange deposit (10%) | £50,000 |
| Further payment at completion | NIL |
In this case, your mortgage deposit and the exchange deposit are the same amount. You hand over all £50,000 at exchange, and there’s nothing more to pay from your own pocket at completion (your lender sends the mortgage funds directly).
Example 2: 25% Deposit
| Purchase price | £500,000 |
| Mortgage deposit (25%) | £125,000 |
| Mortgage required | £375,000 |
| Loan to value | 75% |
| Exchange deposit (10%) | £50,000 |
| Further payment at completion | £75,000 |
Here, only 10% is needed at exchange.
The remaining £75,000 of your deposit is paid at completion alongside the mortgage funds. Your solicitor will tell you when each amount is needed and will request the funds from you in advance of each stage.
What If You Don’t Have the Full 10% Available?
This is one of the most practical questions buyers ask, and it comes up often. There are two common situations where the full 10% exchange deposit isn’t available.
High LTV Mortgages (90% or 95%)
If you’re using a 90% mortgage, you only have 10% cash, so all of it goes at exchange and nothing is left for completion (which is fine, as the lender covers the rest).
If you’re using a 95% mortgage, you only have 5% cash, which is less than the standard 10% exchange deposit requirement.
High LTV lending is growing: in December 2025, 44% of first-time buyers opted for 85-90% LTV mortgages, the highest level seen in more than a decade.
In this situation, your solicitor will need to negotiate with the seller’s solicitor to agree a reduced exchange deposit. This is common practice and sellers often agree to it, but your solicitor needs to handle it early in the process rather than at the last minute.
Home Movers Using Equity
If you’re selling your current home and using the equity as your deposit, you won’t physically have the cash until your own sale completes.
In a property chain, exchange deposits can be passed up the chain, with each party using the deposit from the buyer below them.
Your solicitor will coordinate this. Where there are gaps or shortfalls, agreements about reduced deposits may be needed between the relevant parties.
Can the Exchange Deposit Be Higher Than 10%?
Sellers should not request a deposit above 10%, and there’s no standard basis for them to do so. If you encounter this, speak to your solicitor straight away.
What Happens If You Pull Out After Exchange?
Once contracts have been exchanged, you’re legally committed to the purchase.
If you decide not to proceed, the seller is entitled to keep the full exchange deposit (or pursue you for the balance up to 10% if a reduced deposit was agreed).
They may also have grounds to claim further compensation for any losses suffered as a result of the failed sale, such as the cost of re-marketing the property or the difference if it eventually sells for less.
The period between exchange and completion should be used for practical preparations: arranging buildings insurance, booking removals, and confirming mortgage funds with your solicitor. That’s not the time for second thoughts about the purchase.
How Can a Mortgage Broker Help With Your Deposit?
A good mortgage broker does more than find you a rate. When they advise you on your mortgage, they’ll factor in the full deposit picture, including how much you need at exchange, what’s left for completion, and whether there are any timing issues to manage around your sale or other circumstances.
If your deposit situation is complicated, perhaps because you’re in a chain, using a high LTV mortgage, or relying on the proceeds of a sale, getting clear advice early means no surprises down the line.
Your broker can also help you understand whether a slightly larger deposit is worth considering to access better mortgage rates, and model what that looks like in practice.
Respect Mortgages can connect you with an independent mortgage broker who’ll review your specific situation, explain your deposit options, and search the whole market for the right mortgage.
Use our contact form or call 0330 030 5050 to get started.
Frequently Asked Questions
Your mortgage deposit is the total sum you put towards the property purchase price, with the rest coming from your mortgage. The exchange deposit is 10% of the purchase price, paid to the seller’s solicitor when contracts are exchanged. The exchange deposit is drawn from your mortgage deposit, not in addition to it.
No. The exchange deposit comes out of your total mortgage deposit. If your mortgage deposit is 10%, you pay it all at exchange. If it’s larger (say 25%), you pay 10% at exchange and the remainder at completion. Your solicitor will confirm exactly when each payment is needed.
The exchange deposit is held by the seller’s solicitor as a part payment for the property. At completion, it’s counted towards the full purchase price. The remainder (your extra deposit plus the mortgage funds) is transferred to complete the purchase.
If you only have 5% available, you won’t have the standard 10% for exchange. Your solicitor will need to agree a reduced exchange deposit with the seller’s solicitors. This is common and usually straightforward, but it needs to be arranged early rather than at the last minute before exchange.
Your solicitor will request the exchange deposit a few days before exchange is due to take place. They need cleared funds in their account before they can exchange contracts. Confirm the timeline with your solicitor as early as possible so you’re not caught short.
No. Remortgaging doesn’t involve buying a property, so there’s no exchange of contracts and no exchange deposit. You may choose to pay down some of your mortgage balance to reduce your LTV, which could give you access to better rates, but that’s a separate decision and not a requirement.
Read more: Do you need a deposit to remortgage?
