In most cases banks or Building Societies will not lend a borrower the full purchase price of a property. The buyer will have to come up with some of the money themselves.

A deposit, also known as a down payment, is the upfront payment that a buyer makes towards the purchase price of the property. The deposit represents a percentage of the total purchase price. The rest is typically financed through a mortgage.

For example, if you are buying a house that costs £300,000 and you pay a deposit of £60,000, your deposit would cover of 20% of the purchase price and you would need to secure a mortgage of £240,000 for the remaining 80%.

The size of the deposit can have a significant impact on the terms of the mortgage. Generally, a larger deposit can result in better mortgage terms because it reduces the lender’s risk.

The size of the deposit demonstrates to the lender that the buyer is capable of saving and managing their money, and it also provides some security for the lender, as it reduces the risk of negative equity for the bank, and the buyer is directly invested in the property.

Most lenders require a minimum deposit of 5% to 10% of the property’s value, but some lenders have started offering mortgages with no deposit.

There are special rules about where the money for a deposit can come from. If your deposit is a gifted deposit your mortgage lender may require a letter from the person who gifted you the deposit that renounces all claim to ownership of the deposit and the property. If you are in this situation you should speak to your solicitor for guidance.

Remember that the deposit is not the only cost you’ll need to cover when buying a home in Scotland. Other costs can include Land and Building Transaction tax, survey costs, solicitor’s fees, mortgage arrangement and valuation fees, and removal costs.